Good day, everyone. Welcome to today's Neurocrine Biosciences update. At this time, all participants are on a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and one keys on your touch-tone phone. You may withdraw yourself from the queue by pressing the pound key. Please note this call may be recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the program over to Matt Abernethy, Chief Financial Officer.
Good morning. Thank you for joining our call today at short notice to discuss the collaboration announced earlier this morning with Voyager Therapeutics. During this call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. Joining me on the call from Neurocrine is Kevin Gorman, Chief Executive Officer; Kyle Gano, Chief Business Development Officer; Eiry Roberts, our Chief Medical Officer; and Eric Benevich, our Chief Commercial Officer. Also on our call, we are being joined by Voyager's CEO, Andre Turenne, and Chief Scientific Officer, Dinah Saw. During this call, Kevin and Kyle will provide insight into the collaboration, and we will then open it up for Q&A.
We will be ending this call around 8:30 A.M. Eastern Time to allow Andre and Dinah to be available for their call, which begins at 8:45 A.M. Eastern Time. I will now hand the call over to Kevin Gorman.
Thanks, Matt, and thank you, Andre and Dinah, for joining the call. Good morning.
Good morning.
It's great to have you. This is the first of many calls and many in-persons that we're going to be having over the years. We've really enjoyed getting to know the Voyager team, particularly Andre and Dinah, through this process, and very much look forward to a productive collaboration across the four programs that we're working on. Given our focus on movement disorders and the anticipated launch of opicapone for Parkinson's disease in 2020, obviously, we're very excited about the phase II Parkinson's program, VY-AADC, that Voyager has been shepherding through the clinic for some time now, and the encouraging results seen so far in their early studies. This collaboration is much, much more, just as Voyager is much, much more than just the Parkinson's program.
I'm incredibly excited about the potential impact on patients through the Friedreich's ataxia and the two other undisclosed programs that we're going to be working on. I believe this collaboration is going to catapult Neurocrine and Voyager to the forefront of drug discovery and development within the gene therapy area for neuroscience. When you think about collaborations and the way that both Andre and I approach this, to be successful, you have to think about what each party brings to the table and, in the ideal situation, to ensure the sum of the parts is worth more together than apart. Voyager brings a tremendous amount of expertise in gene therapy.
Neurocrine brings a rich history in CNS drug discovery and development and now commercialization. Combining our track record with Voyager's leading approach to gene therapy will clearly allow us to pursue life-changing medicines.
In addition, each of our respective organizations are going to be advanced beyond what we could have done apart from one another. With that as a backdrop as to why did we do the deal and why we're so excited, Kyle will now give you a bit more insight into the collaboration structure and also respective programs. Once Kyle is done, we'll turn it over to your questions. Kyle?
Thank you, Kevin, and fully agree about what it takes to form a strong collaboration and believe the structure here aligns with the strategic goals that both Kevin and Andre established for this partnership at the outset and our respective companies. Over the past year and more intensely over the past six months, we have spent a considerable amount of time, effort, and energy performing diligence on these programs and engaging with external experts and KOLs. Needless to say, what we found led us to the collaboration announced today. Let me provide a bit of insight on the lead programs and also on the collaboration structure. Voyager's lead program, VY-AADC, in Parkinson's disease keeps us in a familiar disease state given our partnership with Bial and our anticipated launch of opicapone next year.
Where VY-AADC fits into the Parkinson's disease treatment algorithm is to help those who have moderate to severe disease and no longer have good control of on time with L-DOPA. Here, the goal is to deliver the enzyme aromatic amino acid decarboxylase, or AADC, to the region of the brain responsible for the processing of the dopamine. In doing so, VY-AADC has the potential to provide a one-time treatment for the repletion of AADC and, importantly, to restore dopamine production in response to L-DOPA.
Results through phase I are encouraging with a sustained increase in on time with up to three years of data at this point. Voyager initiated a phase II study, RESTORE-1, with the first patient dose in December 2018. A second pivotal trial is planned for next year. Switching gears now, talking about the Friedreich's Ataxia program. This is a program currently at the preclinical stage.
Friedreich's ataxia is an autosomal recessive disease characterized by reduced frataxin levels, leading to a progressive Ataxia, neuropathy, and cardiac disease. Oftentimes, patients end up with a loss of sensation, wheelchair dependency, and serious cardiac symptoms, which can lead to death. Currently, there are no approved treatments for Friedreich's ataxia. We look forward to working with Voyager to advance this important development candidate and the potential to help patients with this serious disease. Finally, as we approached this collaboration, we had several disease states of high interest that we believe Voyager could help us pursue. We have not yet begun work on these programs, but we'll provide updates in the future as these progress from discovery to development. Now let's turn to the collaboration structure. Our press release provides a good overview of the economics.
In general, we are paying $165 million in cash, including $115 million up front and $50 million in equity at $11.96 per share based on a 25% premium over a trailing average. In addition, we will fund development for these programs, with Voyager being eligible to receive various development, regulatory, and commercial milestones, along with royalties on net sales upon commercialization. For the Parkinson's disease and Friedreich's ataxia programs, Voyager has certain points of time where they can opt into a profit-sharing arrangement where they would share in the cost and forego certain milestones and royalties. As you can see, we have a lot to be excited about and look forward to this collaboration.
Thanks, Kyle. Because this call is short, we plan on going no longer than until 8:30 A.M. We wanted to keep our introductory statements very brief. At this point, I would like to open it up for your questions.
At this time, if you would like to ask a question, press star one on your touchtone phone. That is star one now on your touchtone telephone. One moment while we queue for questions. Again, that is star one on your touchtone phone. We'll take our first question from Charles Duncan of Cantor Fitzgerald. Your line is open.
Hi, guys. Thanks for taking my questions. I'll be quick. I just had a couple of clarifying questions and then one on the Parkinson's program. Regarding the milestone payments, are these equally split between the four programs and then within a program across development, regulatory, and commercial milestones? If this is not the case, how should we think about near-term outflows, say, in the next one to three years for Neurocrine?
Thanks, Charles. This is Matt, I appreciate the question. You'll see it in an 8-K filed with Voyager today or this morning. It's out there. You can see the mix by program and also the split between development, regulatory milestones, and then also commercial. That should be able to give you an insight. It's about $600 million across the programs on the development regulatory front and then $1.1 billion on the commercial side of the equation.
As it relates to ongoing investment, I'll provide additional insight into what we expect to fund for 2019 on our earnings call next week. To be clear, in the deal itself, we will be covering all costs associated with these programs up until a point when Voyager does have the option to elect into a profit-sharing arrangement on the Parkinson's and also the Friedreich's Ataxia program.
Hopefully, that gives you the clarity you're looking for, Charles.
Yeah, it does. On that Friedreich's Ataxia program, it is 60/40. Is the 60 Neurocrine, or is it 60-
That is correct. Yes. Yeah, that is correct. It is 60 Neurocrine.
Regarding the Parkinson's program, frankly, this is a program I have been very interested in for a long time. I used to actually cover Voyager when I was at my last firm. Pretty cool program. From a longer-term commercial perspective, this makes a lot of sense in terms of synergies for where Neurocrine is. Could you help us understand your perspective on the clinical value potential in this patient population? I think Kyle referred to one-time treatment, at least relative to the administration paradigm. In your KOL work, what was the perspective on that?
Thanks, Charles. Eiry, do you want to answer that, please?
Yes, I can do that. Thanks, Charles. Thanks for the question. Certainly, in our KOL work, we know and understand that there is still a significant unmet clinical need in Parkinson's patients, especially those that have troublesome motor fluctuations.
Which that is a significant proportion of the Parkinson's disease population over time. We're particularly excited about this approach, given, as you mentioned, that it is a one-time treatment and that it really classifies very much as a precision-related medicine in that regard, in that this enzyme and the gene carrying this enzyme is delivered to exactly the right part of the brain where it needs to be to form dopamine locally and therefore provide significant clinical improvement for patients' motor fluctuations. We do believe there's a lot of opportunity for this medication to add significant value for patients with motor fluctuations moving forward.
Obviously, the initial population that would be of significant interest is those that are currently receiving treatments like Deep Brain Stimulation. Obviously, that's a small proportion of the Parkinson's patients. We believe the opportunity is much broader than that given the data that we've seen to date. We're very interested in continuing to partner with Voyager in their current pivotal program, phase II-3, in order to understand how best to move this molecule forward.
Okay. Thanks for the added color. That's helpful, Eiry. Congrats on the collaboration.
Thank you.
Once again, that's Star One asking a question. We'll move next to Geoff Meacham of Barclays.
Hey, guys. This is Scott on for Jeff. Just one quick question. At a high level, how do you view the ultimate lifecycle management of opicapone with the new AADC asset? Thanks.
Thank you for that, Scott. Actually, we see these two drugs as being very complementary. They can be used in the same patient population, so they overlap quite nicely. They are both working in order to restore the dopamine balance in these Parkinson's patients to lower the amount of dopamine that needs to be used by the physician, or levodopa to be used by the physician, and to ultimately lead to greater on-time and obviously less off-time . We enjoy, starting next year, hopefully commercialization next year as we are on track now to file the NDA for opicapone. That we'll start commercializing it next year. We have a nice long patent life to opicapone, so we're going to invest heavily into that.
I think that really smooths the way and opens us up to be able to interact with all the physicians that we will be interacting with when we commercialize VY-AADC. They are very complementary. I think that it allows us to really broaden the span of Parkinson's patients and bring the doctors two very complementary but very different medications. Do you have anything that you'd want to add to that, Eric?
Other than the fact that we're just really excited about the opportunity to bring another treatment option to these patients that have high unmet need in Parkinson's. You've got two different approaches to improving motor control in these patients, we're really thrilled at the opportunity to bring a new approach to market.
Great. Thanks.
We'll take our next question from Brian Skorney of Baird. Your line is open.
Hey, good morning, guys. Congrats to everyone involved on the deal. Really exciting. Kevin, I was hoping maybe you just contextualize the results that you've looked over and gone under the hood with AADC. I think a bit of the controversy is around a little bit of dose relationship and what adequate AADC expression you need, and the durability that you get, and how that kind of matches up with what they're seeing in terms of on time without troublesome dyskinesia, as well as actual levodopa doses. Maybe just in your review of the clinical data that you've seen so far, what do you think is the most compelling one or two points around the efficacy?
Yeah. Thanks, Brian. Obviously, we found the data very compelling, although you have to have the caveat that all the data thus far collected is open label. To go more into the details of this, I'm going to take you back to Eiry and have her answer that question in more detail. Eiry?
Yeah. Thank you. Well, first of all, I think, thanks very much, Brian, for the question. I think we're in a very favorable position here with this approach because we are able to answer important questions associated with dose response and do that using both biomarkers and the clinical data. I think it was very appealing to us that we were able to look from the data, firstly, in terms of understanding how much of the dose was being delivered to the putamen real time with the MRI imaging that went along with each injection.
Secondly, the PET imaging that can be done in follow-up to the dosing and administration shows the level of expression that you're seeing of the AADC enzyme and allows you to very much understand the degree of activity that you're having within that individual patient.
As a result of that, we have seen in the phase I data, albeit open label, that translates into very clinically significant benefits in both on time without troublesome dyskinesia of up to 2.7 hours per day out to two years after a single dose administration. I think there is a very clear correlation there that we're seeing. It becomes important as we move into the placebo-controlled trials now required for registration that we fully understand how to move forward in terms of the approach in those trials. We'll look forward to partnering very closely with Voyager and with the agency in ensuring that we have a robust package there to answer the question around ultimate clinical benefit.
Great. Thank you.
Thank you. Our next question comes from Paul Matteis of Stifel.
Great. Thanks so much for taking my questions. Just again, on the clinical data side, I was wondering if the Neurocrine team could comment on how you've gotten comfortable with the Voyager Parkinson's data, given that there's no placebo arm, and what you might expect for the performance of placebo in a study where patients are undergoing some sort of procedure. In Parkinson's, I think the placebo effect can be significant. Secondarily, can you just comment on separate from the deal value in this transaction, how much investment Neurocrine might have to employ, if any, in the build-out of manufacturing? Thanks so much.
Second part of your question pretty quickly. On the investment side, beyond just the funding for the programs, there will be limited to no investment on getting scale-up for manufacturing. Our investment and continued investment will really be the milestones and then also the funding of these programs, as I highlighted earlier. I will provide more insight into our 2019 investment into this collaboration on our call next week. We'll go back to the first part of your question for Eiry.
Hey, Paul. Thanks for the question. It's really obviously a very important question and one which we've given a lot of consideration to. Not surprising that the phase I data or data to this point for this program would be open label. That's very consistent with other gene therapy programs in this area. We do believe that the data from those phase I studies was compelling.
Obviously, the question that you ask about placebo response is a very important one. I think that speaks very directly to our upcoming collaboration with Voyager Therapeutics in terms of understanding that we have the most robust and appropriately powered trials to support the registration. In addition to that, we anticipate working together on the statistical plan to ensure that that's as robust as it needs to be and that we have alignment on that with the FDA.
I think we look forward to that collaboration, and we look forward to being able to use both our knowledge in this space, historical data from Parkinson's disease trials, and ensuring that all of that is incorporated into a very robust package moving forward. We know, based on recent feedback, that the size of the RESTORE-1 trial has been increased, and we'll continue to work with Voyager Therapeutics in ensuring that we're putting up both of our sets of expertise together to ensure the most robust program possible.
Thanks, Eiry. Eiry, I think Voyager Therapeutics had said that study was originally powered for a two-hour difference between drug and placebo. Is there any update to that or is it still in the works?
I can't comment on that at this point, Paul. We need to have those more detailed conversations, obviously, in collaboration with Voyager Therapeutics moving forward. We're certainly very much looking forward to that and very excited about the prospect of working together.
Okay. All right. Thank you.
Paul, this is Kyle. I just want to interject a few things. Obviously, at Neurocrine Biosciences, we've looked at a lot of programs over the years, a lot of placebo-controlled trials. What you don't typically see in those programs are movements of all the endpoints, quality of life measures, things of that sort, all move with increases or decreases in dose, depending on how you look at it. With this program, what we are interested in is the mechanism and the durability of the response and the mechanism AADC, that scientific rationale is solid.
We know that role in Parkinson's disease quite nicely. The next piece is durability. We have functional data with AADC in non-human primates out to 15 years. We've got durability of response in subjects in the phase I study out to 3 years.
If you look at the cohorts that were in the phase Is across the different doses, at every measure that's important in Parkinson's disease, you see a dose response, and you also see decreases of L-DOPA usage with increasing doses of AADC. I think the whole program in its entirety really gives you good comfort that moving into the pivotal trials, that this is going to provide a result that's going to be very positive for patients.
Okay. All right. Thanks, Kyle. Appreciate it.
Our next question comes from Biren Amin of Jefferies.
Yeah. Hi, guys. Thanks for taking my questions and congrats on the deal. Maybe just to start on the Parkinson's disease program. Are you planning to initiate the RESTORE-2 phase III trial this year, or are you going to wait for the readout and data from RESTORE-1 before you start that study?
Yeah. Thanks for the question. As Eiry has mentioned, we're going to engage deeply with the Voyager team and make sure on both the RESTORE-1 and then what we're going to do with the second pivotal is adequately powered and structured to give us the answer that we would be trying to find in those trials. Stay tuned as we engage in those conversations. We'll provide updates along the way.
Also, what I would add to that, Biren, is that our goal here is to really work with Voyager in moving this program and actually all four of our programs along. We all have a sense of urgency with these programs. We want to be very smart about this, but we want to be very nimble and keep up and move them quickly.
Got it. Then if Voyager opts in after the RESTORE-1 data, what milestones would they forego? Can you just outline what the structure of the deal would look like if they opt in on the Parkinson's program and on the Friedreich's Ataxia program?
Yeah, we're not going to get into all the exact details of what goes in or what goes out. We'll likely provide more color as that option would be exercised. They would forego some of the milestones, and then they would then start sharing in the cost of the program at that time.
Okay. Thank you.
Yeah, this is our last question from
Anupam.
Mr. Rama, your line is open of JP Morgan.
Hey, guys. Thanks so much for taking the question, and congrats on the deal. Just a quick one for me. What are the gating factors to understanding the pathway and opportunities for the two undetermined programs, and what are the timelines there? Thanks so much.
Well, Anupam, thank you. There's several programs that we have at Neurocrine had through our research and our ideas that we really wanted to explore. As we've talked about these over the years here, we've often said to ultimately do what we want to do is not utilizing a therapeutic modality of orally active small molecules. It's another therapeutic modality, ideally gene therapy. This gives us the opportunity to do that. What you're going to see is that Voyager and ourselves are going to be working through these.
This really goes to the heart of the talent of Voyager in guiding these programs along in the early stages and getting them ready for the clinic. Once they're ready to hit the clinic, that's when Neurocrine is going to step in on these programs and usher them through.
It's really going to be from once they enter the clinic going forward that you're going to start hearing from us on these.
Thanks so much for taking our question.
I'd like to thank everyone today, and I hope that you now will, in a few minutes, be going over to the Voyager call. Once again, I'd like to thank Andre and Dinah for joining us on this call, and we are very much looking forward to kicking off this collaboration. Thank you, everyone.
This does conclude today's Neurocrine Biosciences update. You may now disconnect your lines.
Goodbye.
Have a great day.