Intra-Cellular Therapies, Inc.
Q3 2017 Earnings Call Transcript

Published: 8 Nov 2017

[Operator:]

Good morning, ladies and gentlemen, and welcome to Intra-Cellular Therapies' Third Quarter 2017 Financial Results Conference Call. As a reminder, today's conference call is being recorded. We will have a question-and-answer session later and the instructions will be given at that time. [Operator Instructions] I will now like to turn the conference over to your host, Dr. Juan Sanchez, Vice President, Corporate Communications and Investor Relations. Please go ahead.

[Juan Sanchez:]

Thank you, operator. Good morning and thank you all for joining us for today's conference call. Our earnings press release providing a corporate update and details of the Company's financial results for the quarter ended September 30, 2017, crossed the wire a short time ago and it’s available on our website at intracellulartherapies.com. Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Dr. Kimberly Vanover, Senior Vice President of Clinical Development; Larry Hineline, Vice President and Chief Financial Officer, and Mr. Michael Halstead, Senior Vice President and General Counsel. As a reminder, during today's call we will be making certain forward-looking statements. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of the Company’s product development candidate, our clinical and non-clinical plans, our plans to present or report additional data, the anticipated conduct and the source of future clinical trials, plans regarding regulatory filings, future research and development and possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions and expectations and are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements and the Company disclaims any obligations to update such statements. I will now turn the call over to Sharon.

[Sharon Mates:]

Thanks, Juan. Good morning, everyone, and thank you for joining us for today's conference call. Today we will provide an update on our lead drug candidate lumateperone, which is in late stage clinical development for the treatment of schizophrenia, bipolar depression and agitation associated with dementia, including Alzheimer's disease. We will then discuss for the first time in detail our Parkinson’s disease program with ITI-214, our PDE1 inhibitor, which has recently entered clinical development in this target patient population. Lastly, we will discuss our novel preclinical program for ITI-333 or triple three being developed for substance use disorder including opioid addiction and pain. Larry will then review our financial results, including the recently completed public offering, which provides us with substantial resources to continue the advancement of our programs. We will then open the line for Q&A. Our lumateperone schizophrenia efficacy program includes two positive randomized double-blind placebo controlled trials and supportive data from a third large double-blind placebo controlled trial conducted in the United States. Importantly in the two studies with risperidone included as an act of control lumateperone demonstrated a differentiated safety and tolerability profile versus risperidone, the most frequently prescribed anti-psychotic for the treatment of schizophrenia. In these studies, lumateperone was statistically significantly superior to risperidone on several key safety and tolerability parameters such as triglycerides, cholesterol, glucose, prolactin and weight gain. In addition, we recently completed a six week open label safety switching study and the second part of the study this study, our long-term safety study, in stable schizophrenia patients treated with lumateperone for up to one year is ongoing. With over 2,000 exposed to-date lumateperone has been well tolerated with a safety profile similar to placebo. We are encouraged by the favorable safety and efficacy data generated in our lumateperone schizophrenia studies. And as previously announced following FDA guidance received earlier this year regarding our planned new drug application, we intend to submit the NDA for lumateperone for the treatment of schizophrenia by mid-2018. We are excited about the results from our most recent study our six-week open-label safety switching study in stable patients with schizophrenia, conducted in an outpatient real world setting. In this study patients with stable schizophrenia were switched from their standard-of-care antipsychotics to lumateperone for six weeks of treatment without the need for dose titration for lumateperone. Lumateperone was generally well tolerated with the safety profile that was favorable. Statistically significant improvements from standard-of-care were observed in body weight, cardiometabolic and endocrine parameters in patients with stable symptoms of schizophrenia when switched to lumateperone and worsened again when switched back to standard-of-care medication. These data are consistent with previous study results, which reflected a safety profile similar to placebo in patients with acutely exacerbated schizophrenia and extends this favorable safety profile to this stable patient population. It is also notable that in this study, symptoms of schizophrenia did not worsen upon switch to lumateperone from standard-of-care. Rather, statistically significant improvement from baseline was observed in the Positive and Negative Syndrome Scale PANSS mean total score. Notably, greater improvements were observed in subgroups of patients with elevated symptomatology such as those with comorbid symptoms of depression and those with prominent negative symptoms. I refer you to the September 7, press release where we provide further details. We will provide further analysis later this year at ACNP the American College of Neuropsychopharmacology meeting. We continue to advance the development of our ITI-007 long-acting injectable program. The differentiated safety and tolerability data to-date with oral lumateperone suggest that a long-acting injectable formulation may lend itself to being an important option for some patients. This program is in pre-clinical development and we will continue to update you as we move forward. In recent months, we’ve made numerous presentations regarding lumateperone and our other programs at scientific and medical conferences. We presented data supporting lumateperone's potential as a potent and rapid antidepressant in a range of mood disorders at the Annual Conference of the International Society for Bipolar Disorders and at the International College of Neuropsychopharmacology thematic meeting on treatment resistant depression. At these meetings, we shared data demonstrating that lumateperone, as a standalone agent, indirectly enhances glutamatergic neurotransmission through both AMPA and NMDA channels in the prefrontal cortex via lumateperone dopamine D1 receptor activation. Additionally, we presented data demonstrating that lumateperone activate key proteins in the mTOR pathway similar to ketamine, which has shown rapid antidepressant effects, yet lumateperone has not been associated with ketamine-like safety concerns. These findings, in addition to the potent serotonin transporter inhibition previously described with lumateperone, suggest the potential for lumateperone to exhibit potent and rapid antidepressant effects in patients suffering from a range of mood disorders including comorbid depression and schizophrenia, bipolar depression, major depressive disorder and treatment-resistant depression. Our lumateperone bipolar depression program consists of three Phase 3 clinical trials

[Larry Hineline:]

Thanks, Sharon. I will be reviewing our financial results for the third quarter ending September 30, 2017, including the recent offering of our common stock that raised $172 million with net proceeds of $162 million, and provide an overview of our expectations for the use of our cash and investments. The net loss for the third quarter of 2017 was $22.9 million, compared with a net loss of $30.3 million for the third quarter of 2016. Basic and diluted net loss was $0.53 per share for the third quarter of 2017, compared to a basic and diluted net loss of $0.77 per share for the same period in 2016. Research and development expenses for the third quarter of 2017 were $18.5 million compared to $23.9 million for the third quarter of 2016. The decrease for the third quarter of 2017 is primarily due to lower costs associated with outside clinical and non-clinical activities. In the third quarter of 2016, outside costs were incurred primarily for the second Phase 3 clinical trial of lumateperone in patients with schizophrenia, which was completed in 2016. In the third quarter of 2017, outside costs were incurred primarily for the Phase 3 clinical trials of lumateperone in patients with bipolar depression and dementia and other lumateperone related trials. General and administrative expenses for the third quarter of 2017 were $5.3 million, compared to $6.3 million for the prior year period. The decrease is primarily the result of decreased stock option expense and legal fees incurred in the third quarter of 2016 for costs relating to the license of certain intellectual property by us to our wholly-owned subsidiary ITI Limited. Cash, cash equivalents and investment securities totaled $328.1 million at September 30, 2017, compared to $384.1 million at December 31, 2016. In October 2017, we raised gross proceeds of approximately $172.5 million with net proceeds of $162 million in a public offering of our common stock. We expect that our cash, cash equivalents and investment securities will be used primarily to advance the lumateperone development programs, to fund pre-commercial activities for lumateperone for the treatment of schizophrenia and bipolar disorder and, if lumateperone receives regulatory approval, initial commercialization efforts; to fund pre-commercial activities for lumateperone for the treatment of behavioral disturbances in patients with dementia, including Alzheimer’s disease; to fund pre-clinical and clinical development of the company’s ITI-007 long-acting injectable program; and to fund lumateperone related manufacturing activities. Funds will also be used for other clinical and pre-clinical programs, including the company’s phosphodiesterase, PDE development activities. With that, operator, could you please open the line for questions?

[Operator:]

Thank you. [Operator Instructions] And our first question is from the line of Bill Tanner with Cantor Fitzgerald. Your line is open.

[Bill Tanner:]

Thanks for taking the question. Sharon, I had one on the ITI-214, interesting comments that you made about the impact on microglia cells and inflammation in PD. So, I guess, is the contemplation that, I mean, if you give the drug and it works quickly, that is anti – that’s an anti-inflammatory, that’s an anti-microglia effect or is there something from a signal transduction perspective that is also involved?

[Sharon Mates:]

Hi, Bill, thanks for the question. Yes, we’re very excited about ITI-214 and the potential for disease modifying effect and through the pathway we described on neuroinflammation. And I’m going to turn it over to Kim to talk about your question in a little bit more detail. Kim?

[Kimberly Vanover:]

Sure. Hi, Bill. So with Parkinson’s disease we are very excited about the ITI-214. We believe with short-term administration will be able to have good motor control and improve the non-motor symptoms associated with Parkinson’s disease. And then through a decrease in the inflammation pathways, it has a potential disease modifying effect to really have a potential for improvement of the disease to slow the degeneration over time and with longer-term administration. And so these data are really exciting, our scientists have been doing a tremendous job in looking at the effects in the preclinical models to show decreases in the pro-inflammatory markers, and we’ll be including exploratory biomarkers in our clinical study as well to follow these.

[Bill Tanner:]

And just thinking about the biology of PDE1, I mean, obviously, isoforms in the PD family some of them you probably don’t mind hitting and some of them you wouldn’t want to. So, I mean, I guess even if ITI-214 is slightly a PDE1 inhibitor, are there things that inhibiting PDE1 and various other – or various parts of the body might be undesirable? I mean, I’m just trying to understand kind of what’s the therapeutic window here or what are the potential segments?

[Sharon Mates:]

Thank you so much for asking that, Bill. Kim, do you want to?

[Kimberly Vanover:]

Yes, that’s a really good question. And the exciting thing, ITI-214 is very selective for PDE1 and we know that PDE1 is expressed primarily in the brain, in the heart, and in the microglia. So it’s really exciting, we’ve done a lot of cardiovascular safety work with ITI-214 and we believe that there’s cardiovascular benefit as well, which also ties into the Parkinson’s disease for the cardiovascular benefit to see if we can improve some of the non-motor symptoms in the cardiovascular system such as the dysautonomia. So we believe that that we really are taking this three-pronged approach in selective PDE1 inhibitors that are unique feature for PDE1 over other phosphodiesterase.

[Sharon Mates:]

And it’s very selective. The molecule is very selective for PDE1 over any other PDE.

[Bill Tanner:]

And Kim, did you mention the cardiac, I mean, I think is it PDE3 that’s an isoform that you might not really want to hit as it relates to cardiac function? So it sounds like in your hands that through the company’s hands PDE1 inhibition in the heart may actually have a beneficial effect.

[Kimberly Vanover:]

Correct.

[Bill Tanner:]

Okay. All right, thanks very much.

[Operator:]

Thank you. And our next question comes from the line of Paul Matteis with Leerink Partners. Your line is open.

[Paul Matteis:]

Great. Thanks so much for taking my questions. I appreciate it. Just first on the NDA submission, Sharon, I was wondering if you could just kind of go through the various components and the current status of where you are regarding generating long-term safety data that’s needed for the submission, CMC, things like that. And just clarify which are most rate limiting at this point?

[Sharon Mates:]

Thanks, Paul. So I’ll just start and then I’ll ask Kim to continue. And we are – as we said, we are on track for submission mid-2018. So I think that our long-term safety is ongoing, and I’ll ask Kim again to comment. But I think that the important take home here is that we’re on track for that that we will have what we need to have for our submission which we are anticipating being mid-2018. Kim?

[Kimberly Vanover:]

Sure. And I would just like to that we’ve been very pleased that we’ve been able to enroll rapidly for the long-term safety study. And as Sharon says, we’ll have what we need, and we have a strong CMC package. And so really it’s a matter of putting together all the documentation for the NDA which we’re doing now.

[Paul Matteis:]

Okay, great. Thanks so much. And then one clinical question, on the broader sort of concept of antipsychotics and the use in – for agitation and behavioral disturbances. Sharon, I was wondering if you could just kind of speaking generally to how you’re thinking about on the dementia behavioral disturbances program has evolved. In the context – if it has evolved, in the context of one new data we got this year from brexpiprazole and then two, a recent presentation from Acadia where they were they showed their ADP data, they showed actually a higher rate of agitation on their drug versus placebo, and they also discontinued their agitation study. How does all these kind of decision making new data in the field influence the way you’re thinking about the mechanistic rationale for ITI-007 in that program?

[Sharon Mates:]

Well, so this time we’ll reverse the order. I’ll ask Kim to comment first and then I’ll chime in.

[Kimberly Vanover:]

That’s a good question. And we really believe that lumateperone has an important feature in that we have full 5-HT2A receptor occupancy in the cortex. And with a little bit of the D2 modulation and the unique feature with lumateperone is that it acts as a presynaptic partial agonist and a postsynaptic antagonist of D2 receptors. And we believe that little bit of D2 modulation is going to be key for decreasing the agitation and the aggression. And go ahead, Sharon.

[Sharon Mates:]

And the D1 receptor occupancy as well. But again, I think your comment on the agitation, yes, we do believe that that little bit of D2 is very necessary for the agitation component. So that's that comment. I don't think we're not well versed enough on other people's products to really make comments on them at last the moment. I think we need to see a little bit more data.

[Paul Matteis:]

Okay, fair enough. And then just one more question in the bipolar program. Are you still expecting kind of sequential enrollment of those studies, one in sort of the first half timeframe, and then the other two towards the second half? Is that the right way to think about it?

[Sharon Mates:]

Yes, that's correct.

[Paul Matteis:]

Awesome. Okay, thanks very much.

[Operator:]

Thank you. And our next question comes from the of Charles Duncan of Piper Jaffray. Your line is open

[Charles Duncan:]

Good morning folks, thanks for taking my question and congratulations on the progress in the quarter. I had a couple of questions some of them related to the ones that were just asked. But just looking for a little additional color, on the long-term safety study schizophrenia, would you talk about that in a separate press release, when it is completed? Or would you anticipate that the next announcement, the submission of the NDA?

[Sharon Mates:]

Talk about forward-looking statements. I think, I'm not sure exactly how to answer that for you. I think that we are preparing the NDA, as you know. I think that it is a little early for me to answer that question. So as you go forward, unless Kim, do want to say anything more?

[Kimberly Vanover:]

No, that’s fine.

[Sharon Mates:]

Yeah, okay.

[Charles Duncan:]

Okay, I guess, what I am really asking is the completion of the long-term safety study dating to the NDA? Or could you submit that information after you file the NDA?

[Kimberly Vanover:]

Maybe I’ll take that Charles. So, I think Sharon doesn't want to speak to what press releases we may put in the future. But from the clinical point of view, certainly, we believe that we have enrolled a sufficient number of patients to meet our long-term safety. We do continue to allow patients to enroll in the study so to say that we've completed the study and when that will be announced is, we can't anticipate that right now. But certainly, we're on track to have everything that we need for the submission by mid-2018. And we believe, we'll have everything we’ll need to support the approval of lumateperone for the treatment of schizophrenia. And we will be providing additional data of that long-term safety program as it moves forward.

[Charles Duncan:]

Okay that’s helpful. Thank you, Kim. And then just hopping over to the question. Previous question on the, I guess, it's a behavioral disturbances associated with dementia or AD, the seems like you folks are very much more focused on agitation, aggression versus psychosis symptoms. And I'm kind of wondering if you're using those words interchangeably or specifically in that you want to focus on evaluating agitation and the aggression versus the psychosis? And if it's that, why aren't you considering a broader cycle system.

[Kimberly Vanover:]

That’s a good question, Charles. But I think agitation, which includes aggression in the clinical definition, is more prevalent. It occurs earlier than frank psychosis in dementia, and sometimes, the psychosis symptoms can be more transient and perhaps more difficult as you lose more insight, those become difficult symptoms to evaluate from a clinical perspective. So with agitation and aggression, there's a clear scale that we can use that the experts have developed to really tap into these aggression and agitation behaviors. And we believe that based on the pharmacology with lumateperone, it really is and will be helpful for reducing the agitation and aggression. I mean, of course, we believe that, what also reduces the psychosis but you really have to focus in on a primary endpoint for these studies.

[Charles Duncan:]

That makes sense to me. So it is really, it is not the activity, it is really about clinical trials and execution than that.

[Sharon Mates:]

That is right.

[Charles Duncan:]

Last question on what actually had one other earlier stage. On long-acting lumateperone, when would you anticipate that to be in the clinic, it looks like an interesting molecule as a follow on.

[Sharon Mates:]

So we are looking at late 2018, or early 2019 for entering the clinic there.

[Charles Duncan:]

And for 214, I’m really intrigued with that and its mechanism. Are you considering also potentially the utility of the mechanism and other degenerative diseases such as NF

[Sharon Mates:]

Other than, we mentioned today that we are looking at Alzheimer's disease. We are presently evaluating several other diseases, for which, there are neuroinflammatory components, so stay tuned.

[Charles Duncan:]

Okay, good deal. Thanks for taking my question.

[Operator:]

Thank you and our next question comes from the line of Bob Hazlett with BTIG. Your line is open.

[Bob Hazlett:]

So, I think I will continue along the pharmacology discussion today. I'd just like to, as you contemplate the six week switching study and the breath of that data, in terms of the improvement in PANSS, that you saw in that, I know, we talked about it previously, but to what are you attributing the improvement in PANSS with lumateperone? Is it a compliance issue? Is it because the pharmacology has lower AES, weaker AES, and that's leading to better compliance? Or is it the pharmacology of the molecule in terms of efficacy measures, where something differentiated is going on? And then, could you comment also on the more torque AE's you saw in that study was there any difference there as well?

[Sharon Mates:]

So I think this is all really addressed to Kim.

[Kimberly Vanover:]

Oh, thanks Sharon. So thanks for the question. In our six-week switching study we did see improvement in the total PANSS switched from standard-of-care antipsychotics in these stable patients and there was a larger improvement in those patients who had greater symptomatology, which we would anticipate. And we believe this is really driven by the unique pharmacology of lumateperone. Remember that, lumateperone is acting synergistically through serotonin, dopamine and glutamate. And we believe that these other components beyond the D2 modulation may help improve symptoms such as the social function. We also have seen a very favorable safety profile, and with in respect to your question on the motor AEs that these are very low and similar to the baseline levels and similar to the placebo levels that we've seen in our placebo-controlled trial.

[Bob Hazlett:]

Okay, thank you for that. And then as you mentioned the movement towards major depressive disorder and depression indications and will get more color along those about what those studies down the road. But as you think about dosing with lumateperone and the certain engagement – and this indication should there be a material difference in dosing with the molecule in MDD or the depression indications beyond bipolar depression?

[Kimberly Vanover:]

So we believe in – just as a reminder that in bipolar disorder, we are looking at doses of 40 milligrams and 60 milligrams. And this is the range where we saw an improvement in the schizophrenia program, the 60 milligrams of ITI-007 was positive in two studies and in one of those schizophrenia studies, the 40 milligram dose did not hit on the primary endpoint. But did improve the positive symptoms of hallucinations and delusions and did improve on the CGI. And these are the two doses, the 40 and 60 milligrams that we've taken forward into our bipolar depression program. And they're at the same doses that we believe would be useful for the treatment of major depressive disorder. Sharon, did you want to add?

[Sharon Mates:]

No, I just like to go back to your question on the six-week open-label safety study and just remind you that the purpose of that study was the primary outcome was the safety and tolerability. And we were very pleased to see that you could in a real-world setting take patients, switch them off the drug that they were on, put them on lumateperone and see the improvements in the cardio metabolic parameters. And then when we switch them back, they again on certain of these parameters in just a short period of time worsened. We monitored for the efficacy, really to know whether or not we were making patients worse. And we were not making patients worse. They remain stable and in fact as Kim said did improve. So I think I just wanted to put all of that into context.

[Kimberly Vanover:]

Right, and then translating that back to the depression question is that then we did see symptoms of depression improve in patients with schizophrenia at these dose ranges as well. And so these are the dose ranges that we would consider taking forward for major depressive disorder.

[Bob Hazlett:]

Thanks. And just in terms of timing. You mentioned we'll hear something on this potentially later this year but could that be a 2018 start for the MDD program?

[Kimberly Vanover:]

That's right.

[Bob Hazlett:]

Terrific. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Ritu Baral with Cowen. Your line is open.

[Unidentified Analyst:]

Hi, this is Alex on for Ritu. I’ve one question on the NDA and then one on Parkinson’s. On the NDA, have you communicated with FDA following the release of the first part of the safety study and if not can you update us on your plans to communicate with the FDA here, specifically on how much long-term safety data that they're going to require at the time of submission?

[Kimberly Vanover:]

So we are always in discussions with the FDA on all of our programs. So we're following the ICAs and FDA guidelines for our long-term safety database.

[Unidentified Analyst:]

Okay, and then on Parkinson's, you mentioned that you're looking at sort of relevant non-motor symptoms, can you give us a sense of what the endpoints would be for depression, psychosis in that trial?

[Kimberly Vanover:]

Sure. So we actually are using the MDS-UPDRS, which includes a non-motor symptom subscale that measures all kinds of non-motor symptoms with depression and anxiety, cognition and other symptoms. And so we'll be looking at this actually in a variety of ways as the exploratory measures. Keeping in mind that the study is designed as a safety study and not powered for typical significance on efficacy measures but looking for signals for efficacy using these exploratory endpoints.

[Unidentified Analyst:]

Right, got it. And just to be clear there won’t be an inclusion or something like on MADRS or HAM-D for depression?

[Kimberly Vanover:]

No.

[Unidentified Analyst:]

Got it. Thanks guys.

[Operator:]

Thank you. And our last question is from the line of Edward Nash with SunTrust. Your line is open.

[Edward Nash:]

Hi, thanks guys. I just wanted to ask one quick question is kind of fully in control of this question. So just so that I'm clear on the semantics here. So with regard to long-term safety so may be I’ll ask it this way, will you have what the FDA would require by number of patients and time on drug exposure, by the time you file or do you just need it by the time it's actually approved, whatever that number – that base number maybe?

[Sharon Mates:]

Our understanding is that we will have everything we need and what we need is for approval.

[Edward Nash:]

Got it, perfect. Okay, that's what I’ll say its associated with approval not actual submissions, that's great. The other question I had is just – I just might have missed, what is the current status with the Phase 3 with agitation associated with dementia and Alzheimer's – specifically in Alzheimer's, that’s still enrolling at this point?

[Sharon Mates:]

Yes, that’s right. It’s still enrolling.

[Edward Nash:]

Okay, well that one would be fully enrolled in 2018 as well as the other three for bipolar depression?

[Sharon Mates:]

Yes.

[Edward Nash:]

Perfect, great. Thanks so much, guys.

[Sharon Mates:]

Thank you.

[Operator:]

Thank you. And ladies and gentlemen, this concludes the Q&A session for today. I would like to turn the call back to Sharon Mates for her closing remarks.

[Sharon Mates:]

Great. Thank you, operator and thank you all for joining the call. At ITCI, we are committed to developing novel treatments for patients suffering from neuro – psychiatric and neurodegenerative diseases. And as you heard on today's call, we continue to advance lumateperone and our diverse drug development pipeline. And we look forward to updating you on our next call. With that operator, you can disconnect. Thank you.

[Operator:]

Thank you, ladies and gentlemen. This concludes the program and you may all disconnect. Have a wonderful day.