Minerva Neurosciences, Inc.
Q2 2020 Earnings Call Transcript

Published: 3 Aug 2020

[Operator:]

Welcome to the Minerva Neurosciences Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session, following today's prepared remarks. The call is being webcast live on the Investors 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 Boni, Vice President of Investor Relations and Corporate Communications at Minerva. Please proceed.

[William Boni:]

Good morning. A press release with the company's second quarter 2020 financial results and business highlights became available at 7

[Remy Luthringer:]

Thank you, Bill and good morning everyone. Thanks for joining us. I hope everyone is doing well. Today, I will focus primarily on Minerva’s lead product, roluperidone which recently completed a double blind task in a Phase 3 trial for the treatment of negative symptoms in patients suffering from schizophrenia. With significant unmet medical need is the main reason why patients with schizophrenia suffer from diminished function and it places a huge burden on patients, families, and the health care system. Today, there is no approved treatment for negative symptoms in the United States. Based on the review of the Phase 3 data, which builds on the Phase 2b data as well as additional data we have compiled over the years, we continue to believe that roluperidone has potential to be the first drug to improve negative symptoms directly and specifically. After giving an update on roluperidone, I will also discuss the seltorexant program and our decision to opt out of the co-development agreement with Janssen Pharmaceutics. Today, I would like to begin with an update on the review of data from the recent Phase 3 trial of roluperidone. The trial evaluated two doses of roluperidone 32 milligram and 64 milligram over 12 weeks. The study was carried out in about 60 clinical sites in the U.S., Europe, and Israel. More than 500 patients were included in the trial. Following the 12 week double blind Phase patients were offered an additional nine months extension period of treatment with the roluperidone on either 32 or 64 milligram. I'm pleased to report that over 300 patients entered the extension and more than 100 patients had now completed the overall one year treatment period. I'm also very pleased to report that only a limited number of patients dropped out of the study as a result of worsening of positive symptoms. This continues to be observed to date in the nine months extension. So what have we learned about roluperidone and schizophrenia from this trial so far. Statistically significant differences were observed as the primary end point with negative score proposed by Steve Marder NSFS, negative symptoms factor score extracted from the timescale between active doses and placebo in week four both doses and week eight 64 milligram only. Those groups receiving active treatment showed numerically superior improvements in NSFS to placebo in week 12 also the placebo improvement was high as well in the Phase 3 trial compared to the Phase 2b. We believe this might be why statistical significance was not achieved at week 12. Functional improvement as measured by the personal and social performance scale or PSP was statistically significantly superior with a 64 mg dose at all assessed weeks with nominal P value of 0.021 at week 12. We continue to explore the drivers behind the improvement of negative symptoms and consequently functional improvement by looking at this core components of negative symptoms. And we suspect it is largely driven by the meaningful improvement in the patient's level of avolition or lack of interest or engagement in goal directed behavior. So what is next once we complete our additional analysis of the Phase 3 data we will be requesting a meeting with the FDA to discuss our data package and the path forward for roluperidone’s development. I would now like to address our second clinical stage program seltorexant MIN-202. On July 1, 2020 we announced that we exercise the right to opt out of our agreement with Janssen for the development of seltorexant. As a result Minerva will collect royalty with mid single-digits and worldwide sales of seltorexant with all indications, with no financial obligations to Janssen moving forward. The decision to opt out of the agreement at this stage of the program led us to retain a new full financial interest in the future revenue stream of [indiscernible] significant commercial potential in [indiscernible] indications. At the same time it remains the company’s obligation to make significant financial payments to fund large Stage 3 program. Our decision to opt out will enable us to align our human and financial resources with our primary focus to receive approval of our lead compound roluperidone and to help source patients for which there is currently no effective treatment. Before handing over to Geoff to give you the financial updates we would like to restate our conviction that roluperidone has significant potential to be the first drug approved to treat negative symptoms. The conviction is based on our growing understanding of negative symptoms and the recent Phase 3 data combined with the data that we had accumulated over the past few years. This encouraging data combined with an innovative mechanism of action and table of safety profile gives us confidence in the future of roluperidone. The roluperidone remains an important program goal [ph] with a potential benefits of patients and their families and the significant commercial opportunity to effectively treat negative symptoms in schizophrenia and beyond. I will now turn it over to Geoff.

[Geoff Race:]

Thank you Remy. Earlier this morning we issued a press release summarizing our operating results for the second quarter ended June 30, 2020. A more detailed discussion of our results may be found in our quarterly reports on Form 10-Q filed with the SEC earlier today. Cash, cash equivalents, restricted cash, and marketable securities as of June 30, 2020 were approximately $35.3 million. 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. Research and development expenses were $5.8 million in the second quarter of 2020 compared to $8.3 million in the second quarter for 2019. For the six months ended June 30, 2020 R&D expenses were $13.8 million compared to $19.9 million for the six months ended June 30, 2019. The decreases in R&D expenses during the quarter and six months ended June 30, 2020 primarily reflects lower development expenses to the Phase 3 clinical trial of roluperidone and the Phase 2b clinical trial of MIN-117. We expect R&D expenses to decrease during 2020 as we have completed the MIN-117 clinical trial and the 12-week double-blind portion of the Phase 3 clinical trial of roluperidone. General and administrative expenses were $5.9 million in the second quarter of 2020 compared to $4.6 million in the second quarter 2019. For the six months ended June 30, 2020 G&A expenses were $10.1 million compared to $9.3 million for the same period in 2019. The increases in G&A expenses during the quarter and six months ended June 30, 2020 were primarily due to increases in non-cash stock based compensation expenses and severance benefits. Net income was $29.5 million for the second quarter of 2020 or net income per share of $0.75 and $0.73 basic and diluted respectively as compared to a net loss of $12.5 million or a loss per share of $0.32 basic and diluted for the second quarter 2019. Net income was $17.4 million for the first six months of 2020 or net income per share of $0.44 and $0.43 basic and diluted respectively as compared to a net loss of $28.3 million or a loss per share of $0.73 basic and diluted for the first six months of 2019. As a result of opting out of the agreement with Janssen, the company recognized $41.2 million in collaborative revenue during the second quarter of 2020, which had previously been included on the balance sheet under deferred revenue. This amount represents the $30 million payment made by Janssen in 2017 and $11.2 million in previously accrued collaborative expenses were given by Janssen upon the effective date of the amendment. The company does not have any future performance obligations under the agreement and will recognize any future royalty revenues in the periods of the sale of products related to the agreement. Now, I'd like to turn the call over to the operator for any questions. Operator.

[Operator:]

[Operator Instructions]. Our first question comes from Joel Beatty with Citi.

[Shawn Egan:]

Hi, this is Shawn Egan calling in for Joel. Thank you for taking my questions. A few for me today. Maybe a little bit more on your decision to opt out of the seltorexant program, why you think that was the right decision at the time and can you provide any color on whether Janssen still plans to develop this effort going forward? And then I have a follow up question on roluperidone as well.

[Remy Luthringer:]

So thank you for the question. It is Remy speaking. So clearly, I mean, I think this molecule is a very interesting molecule, a very important molecule, and obviously we cannot speak [indiscernible]. But I think this is really a project which is really moving forward. And I really hope that this molecule is going to patients who need this kind of treatment. For the first part of the question, maybe Geoff you can take it, why we opted out.

[Geoff Race:]

Yeah, thanks for the question, Shawn. The decision to opt out was really based on a return on investment decision. We were looking at the benefits of this program, the European rights that we had as part of our agreement with Janssen and the royalty rate compared to the size of the investment that we would have to make in the Phase 3 program. And we felt that it was a better return for Minerva and its shareholders to opt out of the program and take the smaller royalty as described by Remy in his updates earlier today.

[Shawn Egan:]

Perfect, thank you. And then on roluperidone, how and when do you plan to share kind of the additional details of the Phase 3 publication, I guess when that data is presented what are the most important data metrics for investors to be kind of zeroing on?

[Remy Luthringer:]

So it's obviously a great question and it's a question we are getting quite often. So what I can say about this is that, I mean, we have really done a lot of additional analysis. I alluded to this in my talk just before, in my avolition before. Clearly, I mean, even if we did not hit a P value at week 12, all the data we have in hand and all the additional analysis are showing that, I mean, as this translates into a functional improvement of the patients. I had also hinted to it, it's clear that like in the Phase 2b the avolition improvement is really the key driver. Remember, we had a publication from Gregory Strauss showing that improvement of avolition was really the driver to improve overall negative symptoms. And as a consequence of PSP and at the end of the day how the patients are functioning all this is really fitting together and all the analysis we are doing is fitting together. Now to give you a complete update with all the details, I don't know when we will do this, but I think the most important is that we are really preparing and be ready for the meeting with the FDA. So we will submit a request for a meeting in the next coming days because we have now all the data or most of the data together. It's now a matter to fine tune all this and I think as the best moment to give you the update is to have obviously the outcome of the minutes from the FDA. Yes, but I think the bottom line is that we are more and more convinced that this drug is doing what it had to do. It's clear that in the Phase 3 we had this effect on placebo, which was more important than in the Phase 2b, and basically not to surprise us, because if you have a highly positive Phase 2b study the expectation from the PIs, the sites and even the patients or the caregiver is higher. So this is obviously one explanation. We obviously went from 30 sites to 60 sites. And this has also an impact that overall, when you're looking to the drug, again, to the functional consequences and from where the effect is coming, avolition with an innovative mechanism of action, I'm very confident that we will have a good meeting with the FDA. So this is where we are and what I can tell you as of today.

[Shawn Egan:]

That’s it, thank you very much.

[Operator:]

Our next question comes from Biren Amin with Jeffries.

[Unidentified Analyst:]

Yes, good morning guys. This is Jeet on for Biren. Thanks for taking our questions. Maybe just two from us Remy. I guess it looks like you're going to be scheduling this meeting with the FDA in the next couple of days. Any idea when that meeting might perhaps take place and when you'll come back with the feedback in hand? And second, do you believe the FDA may be willing to accept post hoc analysis data and are there any examples of the FDA accepting such data in the neuropsych space for regulatory approval? Thank you.

[Remy Luthringer:]

So concerning the timing obviously if we submit the document very soon, which will be the case usually. I mean, there was a time to get a meeting granted is 60 or 75 days, depending on the type of meeting you will ask for us. So, definitely we will have how to say this, meeting as a feedback during the last quarter of -- or end of the third quarter sorry. And we might get the feedback one month later. So third quarter meeting and the feedback one month later. So this is a perfect life. I don't know what is the impact of COVID on the meetings as the FDA has been responsive but what I heard that minimum things are on track and the FDA is respecting the timetable. So again our meeting is in Q3 and feedback afterwards when we have the minutes. Now concerning your question, I mean, I think our package is not only based on post hoc [ph] commodities. Obviously, we have done a lot of post hoc analysis in order to better understand, for example, the placebo behavior. We have done obviously some post hoc analysis in order to better quantify, for example, the effect on the PSP. So to see if I mean, PSP and negative symptoms improvement are correlated, is avolition a driver, or what I was speaking about before. But the -- is just confirming some analysis which was scheduled in the statistical analysis plan, which has been submitted to the FDA before we did the post hoc analysis and before obviously the data came out or the opening of the blinds. So I think we have in our package quite a lot of analysis which have been done not post hoc but priori which hopefully will convince the FDA. This said I think there are some examples, maybe not in the CNS space but I mean, there are some examples where the FDA was giving a green light to the sponsor to move forward based on not absolutely a P value on the primary endpoint and some additional color which was given by post hoc analysis. So again, I think we have a lot in our data. Again, I'm not saying that we achieved the primary endpoint at week 12, definitely not but all the rest of the data pointing towards the fact that the molecule is working, but the things are extremely similar to the Phase 2b. Again remember I showed the combination of the two studies. This will not be something really we will consider, but it will help. But again, long story short I think we have enough a priori analysis, which hopefully will convince the FDA.

[Unidentified Analyst:]

Appreciate the color. Thank you.

[Operator:]

Our next question comes from Thomas Shrader with BTIG.

[Unidentified Analyst:]

Hi, good morning. This is Julian on for Tom. Thanks for taking our questions. First, just keeping in mind it's still early can you possibly talk about what an additional Phase 3 study for roluperidone would likely look like if that's ultimately in your best interest, would it likely just be one dose and could we expect a shorter study duration and any other differences you could comment on at this time?

[Remy Luthringer:]

So first of all, again, I mean, I as a company and personally now having really moving forward this molecule from the beginning and try really to address this unmet medical need and I think this is an important virtue [ph] that we are dealing with unmet medical need, which has no treatment. And this is what is really making that these patients are not able to get any decent life and are not functioning in the family life or even being able to getting a small job which obviously would be very important. So again, I really think that this is really what is driving us and I'm sorry I missed your -- can you repeat your question just so that I can give you the right answer.

[Unidentified Analyst:]

Yeah, sure. So perhaps after you reconvened with the FDA, if it's [Multiple Speakers] yeah, yeah, can you hear me.

[Remy Luthringer:]

Yeah.

[Unidentified Analyst:]

So if after that meeting it is in your best interest to proceed with an additional Phase 3 study, can you give us a sense for what that would likely look like compared to the most recently concluded one, whether it might be just one dose, whether it will be a short duration, things like that?

[Remy Luthringer:]

So what I wanted to say is basically -- what I wanted to say is that, I mean, obviously it's the best study or if we have to do a study it would be to go with one dose. Definitely no extension like in this study. Yes, always a Phase 3 study we just completed because as you heard, we will accumulate a lot of data in terms of extension. And this will be very important in terms of also having some efficacy measurements. And we already know that things are going very well in the extension. So this definitely will be a study without an extension. So one dose versus placebo, definitely not two doses. So that is what I wanted to say and this is the reason why I started with explaining negative symptoms, is that avolition is a driver. We will obviously discuss with the FDA, if we have to do a study, we will discuss what is the best primary endpoint, what is a way to calculate negative symptoms, and how do we extract functioning. I think we did the right thing. I think it's clear that I mean negative symptoms is a construct of different sub course, as you know. I mean, the consensus today is that negative symptoms is this Phase A avolition and it is only -- this is part of the negative symptoms construct. And also that they mean, it is well accepted that was a mild to negative score can be subdivided into two items or into two dimensions, experience, and expression. And remember here we had with experience, we had a highly significant P value there. So I think there will be a discussion if we have to do a study about what is the best primary and what is the best secondary endpoint. But I think yes, you are right, it would be a much smaller study, much more straightforward study. But what would change us because you ask this question, I think what we will change is definitely reduce the number of sites, because I think what happens in this Phase 3 is that we really were able to in brackets control the sites or trends of sites very well. But I mean, maybe one or two sites did not completely do the scoring as they should have done the scoring. So we will reduce the number of sites. And we have obviously a lot of insight of how the sites have performed because we have also completed the analysis of the 60 sites we have participated in this study. We have also -- we went back to the analysis of all the sites to sort of decide who had participated as Phase 2b. So this would be the first thing to have really the right sites to really create this motivation by the sites to really score the patients not in the context, but really score the symptoms of the patients because this is the essence of having a separation from placebo or this will be a criteria we will implement in order to make sure that we will have a successful study and discriminating placebo from treatment.

[Unidentified Analyst:]

Okay, got it. Thanks, that's very helpful. And then last on seltorexant, are you aware of any plans at this time for development in the broader insomnia market beyond major depressive disorder what Cornell did, insomnia is that something you have any visibility on?

[Remy Luthringer:]

I think we see [indiscernible] out of the program and we took our royalties. Keep in mind that it means as the patient populations, the MDD population, who will be included in this Phase 3 program run by Janssen, these are patients who have complained of insomnia and as you know insomnia is a big driver of depression. But I mean, it's going a little bit beyond this because the insomnia will be characterized in the eligibility criteria of the patients. And in addition, insomnia will also be quantified subjectively and objectively during the trials. So I think the insomnia part is already covered in the trial or in the trials which will be run with the MDD population.

[Unidentified Analyst:]

Okay, great. Thanks very much.

[Operator:]

[Operator Instructions]. Our next question comes from Jason Butler with JMP Securities.

[Jason Butler:]

Hi, thanks for taking the question. Just a quick one for me and just wondering how you think about partnering priorities for roluperidone now with this data on hand, either in the U.S. or in other global territories. Is it more of a priority, are there things that you would consider or have you already started any discussions? Thanks.

[Remy Luthringer:]

So Jason, maybe I will give over to Geoff in a minute, but I think as we discussed already in the past, I mean we have always been open to discuss within bounds we got from pharma companies. So as you know, I mean, as you can guess, a lot of pharma companies are completely aware about roluperidone and the development we have done. But we continue obviously to give them the updates if updates are asked for. But maybe Geoff, you want to give more color on this.

[Geoff Race:]

Thanks for the question, Jason. There isn't really much more to add to that. We'll have our discussion with the FDA, which should provide additional information to potential partners and we'll have those discussions at that point in time.

[Jason Butler:]

Okay, great. Thank you.

[Operator:]

Our next question comes from Myles Minter with William Blair.

[Myles Minter:]

Hi guys, thanks for the questions. Just the first one on the potential differences between the placebo response in the Phase 2b and the Phase 3. I had the data for a little time now, I'm just wondering whether there's anything that's coming up in this additional data analysis that really points to the reasons why you would have seen a difference, is it really just the difference in the quality of the clinical sites that you alluded to Remy that that might be describing that or is there something else in the patient demographics that are coming up, I only ask because this is obviously something that you're going to be formulating an argument with the FDA about so just wondering any additional color as to the specific reasons why that differential response might have occurred?

[Remy Luthringer:]

Yeah, so this is obviously a great question. And as you can guess, I mean, we've worked a lot on this and I think we have a clear understanding of what's happened. Yes, I mean, I was mentioning the quantity of scoring of some sites. And I mean, definitely I mean we know that this has had an influence on the data. But I think what I was also mentioning, the expectation after positive studies is increasing. Clearly, the patients who have been included in the study in terms of characteristics, in terms of level of negative symptoms, of duration, of some negative symptoms, in stability, in terms of positive symptoms has definitely not changed between the two studies. So really I think it is basically several things. Again, the expectation of having an important study in hand, which has shown a very clear sense of negative symptoms, which has an influence on how the sites are scoring. There is another aspect which is important is that during the study and we have several reports from sites about patients who have dramatically improved and are back to work, which obviously we will have in hand when we are going to the FDA. So really, the sites could see that there is an improvement of the patients during the course of the of the 12 week double blind phase that was towards the end of the study or towards the end of the recruitment, is willingness to push the patients to the extension, because here obviously you know that they are treated with 32 milligram or 64 milligram. So there are a lot of things which are explaining why we had this what they call inflation of a placebo arm. But I think the most important of our data and I think this is something which will be very helpful when we are going to present doses and what you will put obviously in the briefing book or what you are going to present to the FDA is to really show and demonstrate that between the Phase 2b and the Phase 3 the improvement we have seen with 32 and more particularly with 64 mg is the same between the two studies. We will again demonstrate that avolition is an extremely important driver. And here things are very, very clear when you are looking to the data we have today at hand. And obviously we will also see more and more go into the details about the PSP, which as you know is the functional improvement. So all these pieces are fitting extremely well together and are definitely not influenced as they have been by the placebo effect or the placebo inflation as the primary endpoint has been influenced. It's not really a surprise because as I tried to explain before negative symptoms is a construct from different aspects and different dimensions. And when you're going more into the details of these, you see that I mean, the Phase 3 is extremely positive and this is coordinating very well treatment from placebo. So this will be the full package we will present to the FDA.

[Myles Minter:]

That's helpful, one final one from me, just in terms of the small amount of patients that have discontinued the open label extension study due to positive symptoms relapse. Maybe in a real world perspective, these patients just go on adaptive therapy with receptor blockers and how they manage there or were there something specific in these patients that they must be withdrawn from roluperidone treatment?

[Remy Luthringer:]

I think there is nothing specific here as I indicated [ph] and I'm coming to your question about add-ons there is nothing specific, because I mean keep in mind here that we have included more than 500 patients and we have really a handful of patients who are relapsing in the double-blind phase and there is a handful in the extension. So if you are looking to the trials which have been run with antipsychotics I mean, whatever your take on antipsychotic first and second generation, when the trials are run over a period of four to six weeks, you have people who are not responding or relapsing on positive symptoms. So there's a number of relapses we see is really in line with what you see with antipsychotics. So I think our data will be extremely helpful to show to the FDA or to the CH&P in Europe that I mean, you can have a significant amount of patients with a diagnostic of schizophrenia who do not absolutely need antipsychotics in order to stay stable in terms of positive symptoms. Now about your question about add-on, as you know and we discussed this in the past we have a review of 150 antipsychotics [ph] in the U.S. and based on the target product profile, we have already a significant amount of these prescribers who are willing to give the drug in monotherapy. Obviously some of them will still go as add-on because this is clinical practice and it will be take a little bit of time to convince that some prescribed as our patients out there who do not need antipsychotics. But I think the field is evolving quite significantly and as also we discussed in the past very, very good publications all showing that you can reduce very dramatically the doses of psychotics and the number of relapses will not increase. So I think as the story is coming together but again, as the data we have in hand are really showing that a lot of patients do not relapse and remember, which is when you're going with our inclusion exclusion criteria, this represents 60% to 70% of the patients with a diagnostic of schizophrenia. So we're not speaking here about the marginal population, but speaking with a very, very large part of the patients with a diagnosis of schizophrenia. So again, long story short, it will need a little bit time. It will need a little bit education. But I think we have here a drug which is really improving negative symptoms and functioning. And I still believe and this was my hypothesis a long, long time ago when I started this project, when you are improving negative symptoms and functioning, you probably are also improving positive symptoms or at minimum the number of hospitalizations/relapses because the patient is more able to cope with this everyday life. So it's a paradigm shift. It is obviously going through a molecule which has less side effects, which is less impairing the patients, which is really having a specific effect on negative symptoms and functioning. So it will take a little bit time to educate as a prescriber, but I think the field is really moving into the right direction here.

[Myles Minter:]

Fantastic. Thanks for the questions.

[Remy Luthringer:]

You are welcome.

[Operator:]

Our next question comes from Douglas Tsao with H.C. Wainwright.

[Douglas Tsao:]

Hi, good morning. Thanks for taking the questions. Just a couple for me. How are you now sort of thinking about or prioritizing some of the sort of subsequent work that we -- you were considering in terms of the ability to sort of prevent onset of the disease or sort of treating patients in the future almost as well as, just now prioritizing resources in terms of some of the other assets in the pipeline and or is it sort of for the time being, just really focusing on getting roluperidone across the finish line? Thank you.

[William Boni:]

Is your line muted Remy. [Multiple Speakers]

[Remy Luthringer:]

So can you hear me now?

[Douglas Tsao:]

Yeah.

[Remy Luthringer:]

Sorry. Sorry Doug. So clearly your first question about going, for example, the prodromal patients or prodromal to subject who have the negative symptoms that you might transform into a full blown psychotic disease, schizophrenia for example, this is still something we absolutely want to do. Yes, because I think that all the data we have are showing that I mean, if you can change disease you might maybe avoid the patients who are having the full blown disease, even if they have some negative symptoms before they have the first episode of positive symptoms. So clearly, this is something we are working on, but this will be done post approval because this is a very specific study and also a study which needs the right subjects in the study. But I mean yes, I think earlier is better in our case or in schizophrenia. Now concerning the other assets, we have obviously the highest priority here with roluperidone. We need to have a very good outcome via the FDA. And based on a positive outcome, I think the other assets can again start to move according to plan. Yes, but the highest priority is to make sure that we have the best outcome from the FDA. And sorry about this technical issue. I was definitely on mute.

[Douglas Tsao:]

Oh, no worry.

[Operator:]

And I'm not showing any further questions at this time.

[Remy Luthringer:]

Okay, so thank you all for the questions and hopefully it was helpful. We are all looking forward to update you very soon about the progress we have made and since the next major key event that will be the update about what the FDA is telling us based on the data we will provide to them. So, thank you again and looking forward to give you an update very soon. Thank you all.

[Operator:]

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