Minerva Neurosciences, Inc

Welcome to the Minerva Neurosciences third quarter 2020 conference call. At this time, all participants are in the listening mode. There will be a question and answer session following today's prepared remarks. This call is being webcast live on the investor's section of Minerva's website at ir.minervaneurosciences.com. As a reminder, today's call is being recorded. I would now like to turn the call over to William Boney, Vice President of Investor Relations and Corporate Communications at Minerva. Please proceed.

Good morning. A press release for the company's third quarter 2020 financial results and business highlights became available at 7.30 a.m. Eastern Time today and can be found on the Investors section of our website. Our quarterly report on Form 10Q was also filed electronically with the Securities and Exchange Commission this morning and can be found on the SEC's website, at www.sec.gov. Joining me on the call today from Minerva are Dr. Remy Lutringer, Executive Chairman and Chief Executive Officer, and Mr. Jeff Race, Executive Vice President, Chief Financial Officer, and Chief Business Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind you that today's discussion will include statements about the company's future expectations, plans, and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. These forward-looking statements are based on our current expectations and may differ materially from actual results due to a variety of factors that are more fully detailed under the caption risk factors in our filings with the SEC, including our quarterly report on Form 10Q, the quarter ended September 30, 2020, filed with the SEC on November 2, 2020. Any forward-looking statements made on this call speak only as of today's date, Monday, November 2nd, 2020, and the company disclaims any obligation to update any of these forward-looking statements to reflect events or circumstances that occur after today's call, except as required by law. I would now like to turn the call over to Remy Lutheringer.

Thank you, Bill, and good morning, everyone. Thanks for joining us. I hope everyone is doing well. As we approach our meeting with the FDA on November 10, we remain enthusiastic about the potential of our lead product, Rolipiridone, and believe it will have a significant impact on the lives of patients with schizophrenia. Our confidence is based on our experience and the clinical database compiled to date with this compound. We are motivated to bring Roliparidone to patients as quickly as possible, as there is currently no approved treatment for negative symptoms, which remain the leading unmet need for patients with disease, their families, and their treating physicians. We announced the top-line results of the 12-week double-blind part of our Phase III study in May. Also, the study did not achieve its primary objective. Results obtained with a 64 milligram dose demonstrated the early onset of beneficial effect on negative symptoms that translated into functional improvements. Glodoperidone was also generally well tolerated in this trial with a safety profile comparable to placebo. Following that announcement, we have completed extensive analysis of data from this trial and others, including an integrated analysis of data from our Phase 2b and Phase 3 trials that shows a highly significant separation between the two doses of Roliparidone and placebo. In addition, we now have a large amount of data from the 40-week open-label phase of this trial, which is on schedule to complete in the first quarter of 2021. In late September, we provided these findings to the FDA in preparation for the Type C meeting scheduled for the 10th of November. During the forthcoming meeting, our findings will be discussed with the FDA, and we expect to receive the agency's feedback about the next steps in the development and potential regulatory approval of Roliparidone. We will provide a further update of our meeting once the minutes have been finalized by the FDA, which is expected in December. In summary, the recent Phase III data, combined with all of the data accumulated over the last few years, continue to support our belief that voluparidone can become an important treatment for schizophrenia patients. I will now turn it over to Jeff for the financial update.

Thank you, Remy. Earlier this morning, we issued a press release summarizing our operating results for the third quarter ended September 30, 2020. A more detailed discussion of our results may be found in our quarterly report on Form 10Q filed with the SEC earlier today. Cash, cash equivalents, and restricted cash as of September 30, 2020, were approximately $32.6 million. During the nine months ended September 30, we raised $12.1 million net of fees from the public offering of stock. and therefore we presently expect that the company's existing cash and cash equivalents will be sufficient to meet its anticipated capital requirements into early 2022 based on our current operating plan. The assumptions upon which this estimate is based are routinely evaluated and may be subject to change. R&D expenses for the three and nine months ended September 30th 2020 were $4.6 million and $18.5 million, respectively, compared to $9.7 million and $29.6 million for the same periods in 2019. The decreases in R&D expenses in 2020 primarily reflect lower development expenses for the Phase III clinical trial of rolyperidone and the completion of the Phase IIb clinical trial of MIN-117 in December 2019. We expect R&D expenses to decrease during 2020 compared to 2019, as we have completed the MIN-117 clinical trial and the 12-week double-blind portion of the Phase III clinical trial of Roloperidone. G&A expenses for the three and nine months ended September 30, 2020, were $3.5 million and $13.5 million, respectively, compared to $4.6 million and $13.9 million for the same periods in 2019. The decrease in G&A expenses in the three-month period was primarily due to a decrease in non-cash stock-based compensation expenses and lower commercial expenses. And the decrease in G&A expenses in the nine month period was primarily due to lower commercial expenses. Net loss for the three months ended September 30th, 2020 was $8.1 million or a loss per share of 19 cents basic and diluted compared to a net loss of $14 million or a loss per share of $0.36 basic and diluted for the three months ended September 30, 2019. For the nine months ended September 30, 2020, net income was $9.3 million, or $0.23 basic and diluted, compared to a net loss of $42.3 million, or a net loss per share of $1.08 basic and diluted, for the nine months ended September 30th, 2019. Collaborative revenue was $41.2 million for the nine months ended September 30th, 2020, compared to zero for the same period in 2019, an increase of $41.2 million. The increase in collaborative revenue was a result of the company's opting out of its co-development and license agreement with Janssen, for CELTA-REXENT. That revenue was recognized during the second quarter of 2020, as there are no future performance obligations under the agreement. Now I'd like to turn the call over to the operator for any questions. Operator?

Ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please fill out what we compiled the Q&A roster. Our first question comes from Jason Butler with GMP Securities. Your line is now open.

Hi, it's Roy in for Jason. Thanks for taking our questions. I guess I probably can't say anything about this, but since you've submitted the material for the Type C meeting to the agency, have you had any feedback from the agency on the material, anything else? And then it looks like you sold about $7 million worth of shares for the ATM in the quarter. Have you guys used the ATM in the current quarter, and how much is remaining under that facility? Thanks.

So, thank you for the question. So, Remy speaking, I will take the first part and the second part I will give it over to Jeff. So, as you know, when you're submitting your briefing book to the FDA and you have a date fixed for the meeting, you get the feedback from the FDA a few days before the meeting happens. So, as of today, we did not get any feedback from the FDA. So, just recognize the receipt of the briefing book. I think there are thoughts and comments on the different questions we asked that will come later this week or early next week. Jeff, can you take the other one, the other part?

Yeah, of course. Thanks for the question. We sold around $5 million worth of stock in the second quarter. We sold $7 million in the third quarter. We haven't sold any stock in the fourth quarter. We had an ATM facility of $50 million in place. We sold 12. That leaves $38 million remaining under the ATM.

Got it. Thank you.

Thank you. Our next question comes from Tom Schrader with BTIG. Your line is open.

Hi, this is Julian on for Tom. Thank you for taking my question. Keeping in mind a lot is still to be determined from your meeting with the FDA next week, I was wondering if you could talk about what preparations you've been making ahead of that meeting for the range of possible outcomes here and how fast you can move forward from there, whether it be additional analysis, filing an NDA, or an additional trial. Thanks.

Yeah, important question, and obviously the success is in anticipation. And as you can guess, we are anticipating the different outcomes. Also, with all the data we have generated and we put in the briefing book, we are extremely confident that the FDA will understand that we have really very compelling data. As you already have seen, when you combine the two studies, phase 2B and phase 3B, The two doses are showing an effect on the primary endpoint, which is the PANS negative score according to MARA. We have a functional improvement. We know that abolition is a driver of the effect we are seeing, and this is really a key driver. But indeed, obviously, we are anticipating any outcome, and we are also working currently on what would be the next steps if, I mean, the FDA is requesting us to do another study. Again, we don't expect this, or we are doing all that we can that this will not happen. And we have already also anticipated, obviously, the analysis of the extension phase, or the extension part of the study, which will end in the first quarter of next year. And so all this is ongoing. All is in preparation. when we will get the feedback, the final feedback from the FDA during the course of December, we will be able to react extremely fast because I think we have anticipated all these different types of scenarios.

Okay, got it. Thank you. That's helpful.

Thank you.

Thank you. Our next question comes from Joel Beebe with Citi. Your line is open.

Hi. Thanks for taking the questions. If another phase three trial needs to be done, could you discuss the potential trial design there and any differences that could help enhance the probability of success?

Yeah, so obviously, I mean, the final study design will be based on the feedback or the discussion or the interaction with the FDA, yes. But clearly, I mean, there are some parts which are completely clear that we will not run them. So, for example, we will not have an extension in this study. So, you know, the nine months extension we have here because, as you know, this is really to the extension is here to tick the box of 100 patients exposed to the drug for one year. And as of today, we have already a lot of patients who have completed the extension. So definitely we are ticking this box. Now, concerning the study, in terms of primary endpoint, I guess it will come out from the PANS scale, as we did for the Phase 2B and the Phase 3. It will be discussed which kind of endpoint, but I think that, I mean, we will still discuss about negative symptom score coming out from the PANS, like the MADA negative score, but maybe it can be fine-tuned. But where I can see some I'll just say, improvements or some modifications, if I can put this in brackets, is in the secondary endpoints. As you know, we already have very good teams that, I mean, on a functional level with PSP total scores, I mean, these patients are improving on a functional level. They are functioning better. So maybe we can fine-tune this aspect because, best of my knowledge, no drug has ever improved negative symptoms and has a consequence, has an improvement in terms of functioning. So I think this is where the discussion might end if we have to do an additional study.

Gary, great. That's helpful. Thanks.

Thank you, Joe.

Thank you. Our next question comes from Doug LaSalle with HC Wainwright. Your line is open.

Hi. Good morning. Thanks for taking the question. You know, Remy, a lot of the sort of key subjects have already been touched upon, but I'm just curious with the ongoing open label extension, are there any, you know, obviously safety is the key, you know, sort of purpose of that, but I'm just curious, are there additional endpoints that are being measured that you think have some, that have relevance and can really sort of enrich, you know, the data set? And as you think about potentially needing to do other studies or just running studies to support, you know, the commercialization? Are there things longer term that you would like to look at, you know, beyond that sort of typical sort of 12 to 16-week interval? Thank you.

Doug, this is a very important question or a very important point you're opening here. So clearly, I mean, yes, we are ticking the box of long-term safety here, one-year safety, but... I think we discussed this already together. We are measuring efficacy as well. And we continue to measure the PANS. We continue to measure PSP. So we will have data for, I think, a significant number of patients at the end of the day for efficacy. So this is the first thing. And I think it will be important, hopefully, to demonstrate exactly what we have demonstrated in the phase to be, which is that after or beyond the double-blind phase of 12 weeks, patients continue to improve for negative symptoms and functioning. So this is obviously very important and I think was an important aspect we could discuss and face the meeting with the FDA. And hopefully we will also be able to discuss this at this meeting, at this upcoming meeting, because We have obviously followed this very carefully, and we are analyzing the data on a regular basis to see where the things are going. But I think there is, beyond the measures and all the scales we're using, I think another aspect which is important, in addition to the safety aspect, is how many patients stay in the study, and how many patients are dropping out from the study, and for which reason. important aspect is to know how many patients are dropping out for relapses of positive symptoms because keep in mind here that, I mean, we have a monotherapy. We have not at all antipsychotics on board. And if we can demonstrate that over a period of one year these patients are stable or even improving slightly on positive symptoms without relapses, I think this is an important aspect as well. So a lot of data coming out from this extension, a lot of data are are probably of interest to be discussed with the FDA. And what I can say is that, I mean, we are monitoring this continuously, and I think we are pointing towards the right direction.

Okay, great. And, Remy, can you remind us when we would expect to see data, you know, the investment community from the open label extension or from the extension? Yes.

So we will have the last patient last visit during the first quarter of next year. So really, I mean, I don't see anything which would delay this. So you should see something as soon as we have the chance to analyze this data. So probably towards the end of the first quarter, beginning of the second quarter.

Great. Thank you so much.

You're welcome, Dr.

Thank you. Once again, ladies and gentlemen, if you wish to ask a question at this time, please press stars and 1 or your touch-tone telephone. Our next question comes from Miles Minter with William Blair. Your line is open.

Hi, Hale. Thanks for taking the questions. Just wondering, probably for Remy, the differences between the significant results you saw on the PSP and, you know, unfortunately, the endpoint that slightly missed on the Mater NSFS, Have you done further analysis to fully understand what the MARTA scale may be capturing or not be capturing that isn't reflected in the PSP or vice versa? I'm trying to understand what components cross over and what don't so that you and also the regulators can get a better sense of what efficacy components are important for this drug.

This is a... A nice question, Miles. I think the way to analyze the data or what you can get out of the data, I think, is a little bit different than what you have presented or what you hinted to. Why I'm saying this, keep in mind that in the model negative score coming out from the PANS, you know that you have the possibility to split this score into two dimensions expression and experience and you know that experience is highly correlated or linked with functional improvement so this has been really described very well in the literature and if you remember our data when we presented our top line results we have a significant effect even at week 12 in terms of experiences. So, so, so already, I mean, uh, if you go with a sub score of the model negative score, you see a function of improvement. And I think this is really what is correlated to, I put it in brackets as I mean, what is linked to functional improvement and what we have seen in PSP, uh, uh, total score. And so, so it's not a surprises. And if you're remembering the face to be, we had exactly the same. I have to say that, I mean, like in the Phase IIb, 64 mg is giving you a stronger functional improvement. And not a surprise that PSP, again, is showing a more significant improvement with a battery effect size with 64 mg in the Phase III, like in the Phase IIb. But, again, I think there is a link here. Now, why the total improvement? pan scale, negative score, sorry, from according to Marduk coming out of the pan did not show significance. Keep in mind that week four and week eight were really significant compared to placebo, and we really missed for not a lot, I mean, week 12. When you're really analyzing what is coming out from the mother negative score you have obviously the five negative items which are really common whatever the way you're analyzing negative symptoms and afterwards you have g16 for example which is added which is coming out from general psychopathology and uh and the more and more the discussion is that maybe g16 is is is yes looking to negative symptoms but might also be linked for example to positive symptoms so i think uh uh you know uh what what in addition to expression, is probably less linked to negative symptoms than the sub-score of experience. So really, I mean, I think all is pointing towards a functional improvement based on sub-analysis, again, of the PAMS negative score and functional PSP. And I think, last but not least, sorry to be so long, but we... We could demonstrate again by going to even more granularity inside the Marder negative score coming out from the PANS and having an estimate of abolition. If you remember, abolition was a driver in the Phase IIb. If you extract abolition again from this Marder score, you see again that abolition is really giving a very significant effect with our drug compared to placebo. So I think the story comes together. It's logic compared to the face-to-be. So I think this is my best explanation.

No, that's helpful. And then maybe one third, Jeff. I guess as you think of best-case scenarios coming out of this meeting being proceed to filing versus running another trial versus something else, How do you think about the differential near-term capital needs for the company and getting that over the line? And also, is there any clause to opt back into the self-direction program when you opted out, or is that completely off the table now that Janssen's proceeded in a phase three trial? Thanks.

Thanks, Myles. I'll take your second question first. So there is no opt back in. We're out and... That's the sort of final position. Of course, as you know, we have a mid-single-digit royalty on worldwide sales of Celtorex and Bet Janssen. We'll be making at some point in the future once the phase three is complete. Coming back to your first question, obviously our first priority is to continue with the extension to the study, and obviously then there's a number of steps that we have to go through in order to file the NDA. Obviously, depending on what we get back from the FDA, we'll need to raise capital at some point in the future. I think it's too early to speculate on what that size of capital raise will be. But obviously, after we've discussed that with the FDA and had the minutes finalized, we'll discuss that with investors and analysts once that number is finalized.

Cool. Thanks for answering the questions, and good luck, everyone, on November 10th. It should be interesting. Thanks. Thank you.

Thank you. Our next question comes from Byron Amin with Jefferies. Your line is open.

Yeah. Hey, good morning, guys. This is Jeet Mukherjee on for Byron. Maybe two quick questions from me. First, you know, if another confirmatory study is required, how quickly could you get that up and running? And the second question is perhaps maybe for Remy. You know, your data, I think, showed that on the PANS classic seven-item negative score, the 64-mig dose was statistically significant. So is there any analysis on your part on which items from the MARTER scale didn't perform so well? And do you perhaps plan to use the classic scale as maybe a primary or perhaps co-primary endpoint for any subsequent Phase III that might be required? Thanks.

Thanks. Yeah, so the first part, I already addressed this one in one of the previous questions. So we are completely ready, yes, I mean, to push the button if needed, yes, I mean, for an additional study. So we have anticipated feasibilities. We have anticipated a study design. We have anticipated the infrastructure in terms of CRO and how we will work with the CRO in order to run the study. So this is really... ready to go afterwards. You have always the regulatory approval in the different countries and all these kind of things, but definitely as soon as we have the minutes, as soon as we know what we have to do, if we have to do it, I mean, we are ready. Coming to your second part, I mean, it's again a little bit linked to what I tried to explain based on the previous question. Obviously, we have analyzed item by item, question by question, we have analyzed our results coming out from the PANS, and particularly from the PANS negative score according to Marder. And as I said, I mean, it's very clear that, I mean, if you're going with the items or the questions which are mostly related to abolition, we know that the drug is extremely active compared to placebo. And so this is just... if needed, a confirmation of what we have seen in the phase to be. As I also mentioned, I mean, you can split the PANS negative score according to matter into experience and expression. And here again, I mean, we can really see that, I mean, the questions slash items which are related to functional improvement or mostly related to functional improvement are Again, very significant with good effect sizes compared to placebo. So yes, there are a few items which are left, which are not showing, or a few questions which are left, which are not showing the same statistical significance. But again, I think all what is related or what is connecting the measurement via the plans of functional improvement is really showing a significant improvement. And maybe a more general comment on all this, when you're going really to the literature and to the current consensus of the scientific KOL medical community, I think everybody is in agreement that, I mean, abolition is really an extremely important key driver of what happens in schizophrenia. You know, these are patients, adolescents, they're good at school, and suddenly they they're losing the ability to really get engaged, to be interested in an activity, which is basically abolition. And it is very well demonstrated that obviously afterwards, I mean, these patients are presenting with other symptoms like anhedonia, aloja, whatever you want. But I mean, this is really a consequence of abolition. So I think... This will be an interesting discussion with the FDA because I know that the FDA, I mean, I'm speaking here about the Psychiatric Division, is interested in subscores to have drugs which are more specifically addressing some parts of a construct because negative symptoms is a construct, basically. It's not a symptom, it's a construct of symptoms. And I'm really confident that we will have a very exciting and constructive discussion with the FDA around all this.

Great. Thank you so much.

Thank you. And I'm currently shown no further questions at this time. I'll turn the call back over to Remy Lufringer for any closing remarks.

Yes, thank you so much. So thank you all for listening, for all your questions. I think all very important questions. And as you can guess, I mean, we are really – The complete company is really focused on this meeting we will have on the 10th of November. And as soon as we have agreed on the final minutes with the FDA, we will obviously share all this with you as soon as we have all the data together. So thank you again and take care.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect. Have a great day.