Minerva Neurosciences, Inc.
Q2 2017 Earnings Call Transcript

Published: 5 Aug 2017

[Operator:]

Welcome to the Minerva Neurosciences Second Quarter 2017 Conference Call. [Operator Instructions] This 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 2017 financial results became available at 7

[Remy Luthringer:]

Thank you, Will, and good morning, everyone. Thanks for joining us today. The second quarter of 2017 for Minerva was marked by progress in a number of key areas, including clinical development, business development and financing. This progress will support the company's clinical development pipeline, including the initiation of five planned clinical trials with three product candidates in the second half of 2017. Key recent accomplishments include an end of Phase II meeting with the U.S. Food and Drug Administration, focused on the design of our upcoming Phase III trial with MIN-101. The completion of a bridging study leading to the selection of an improved formulation to be used in this trial. The negotiation of an amendment to our codevelopment and license agreement with Janssen Pharmaceutical related to MIN-202, and the completion of a financing that expand our base of recognized institutional investors and significantly extended our financial run rate. We also have two investor calls with key opinion leaders. The discussions focused on unmet needs in schizophrenia and on the rationale for the design of the Phase III trial with MIN-101. Peer-reviewed recognition of our Phase IIb clinical data was additionally reflected in a publication by the American Journal of Psychiatry. I will review these activities beginning with MIN-101. Informed by feedback from the end of Phase II meeting with the FDA, we have confirmed the key elements of the Phase III trial design with MIN-101. To a significant degree, these parameters measure the design of our successful Phase IIb trial. So Phase III trial will consist of a three months randomized double-blind placebo-controlled core period followed by a nine months open label extension period. Approximately 500 patients will be randomized one to one to one, to two doses of MIN-101 monotherapy versus placebo. The primary outcome will be improvement in negative symptoms as measured by the Marder score. The Marder score includes a question from the Positive and Negative Syndrome Scale or PANSS scale that is well correlated with functional outcome in patients and not contained in the pentagonal score utilized in the Phase IIb trial. In fact, a post-op analysis of our Phase IIb data utilizing the Marder score shows the improved effect sizes and p-values relative to placebo as compared to the pentagonal score. Approximately one-third of the patients recruited are expected to come from the U.S. with the remainder from the E.U. A total of approximately 60 clinical sites will be included in the trial. We plan to recruit patients who have been symptomatically stable in terms of positive and negative symptoms for six months with moderate-to-severe negative symptoms with a PANSS score of greater than 20. We believe that this eligibility criteria represent a significant portion of schizophrenic patients suffering from negative symptoms and thus cover most patients who are unable to function well during everyday life. We also recently completed a bridging study in healthy volunteers to identify an improved and final formulation of MIN-101 to be used in the Phase III trial and in the CMC scale-up activities currently ongoing. In summary, data from this study showed bioequivalent exposed between the improved formulation and the formulation used in Phase IIb study in terms of the parent compound. It is important to note that through PK-PD analysis of drug plasma levels versus negative score performed on our Phase IIb data shows at MIN-101 efficacy is driven by exposure of parent compound. Reduction of the maximum concentration Cmax of the metabolite associated with transient [indiscernible] increases when a certain level is achieved. We believe this decreased Cmax of this metabolite confers an improved safety margin to MIN-101 [indiscernible] cerebral fluid effect, which is a key element when MIN-101 is used in an everyday clinical practice. Following the completion of this study, we're planning to initiate the Phase III trial on schedule in the second half of 2017 with the same doses used in the Phase IIb trial. Again, the improved formulation is expected to show an improved safety profile at equivalent doses. Coming back to our Phase III study safety, we continue to be monitored as it was into Phase IIb with specific attention to the side effects seen in standard of care which were not observed as MIN-101 in Phase IIb. We expect top line results from the three months double blind phase of this trial in the first half of 2019. With respect to our request for breakthrough therapy designation from MIN-101, the initial feedback we received from the FDA, while denying our request confirmed the treatment of negative symptoms of schizophrenia meets the criteria for a serious or life-threatening disease and consequently for breakthrough therapy designation. The FDA advised that they were not able to grant such designation at this time pending receipt of additional analysis of certain data from the Phase IIb study. We're currently in dialogue with the agency to clarify why we believe the existing data provides the analysis the FDA is seeking. Finally, I'm pleased to report that the American Journal of Psychiatry has accepted for publication the results of our Phase IIb trial with MIN-101. Publication of data by this prestigious journal reflects peer reviewed recognition by the scientific and medical community of a new and innovative approach with the potential to alleviate continuing unmet need in patients suffering from schizophrenia and presenting with negative symptoms. I would now like to move to MIN-202, JNJ-42827922 a selective orexin-2 receptor antagonist that we are developing in partnership with Janssen Pharmaceutica NV Janssen. In June, we entered into an amendment to our codevelopment and license agreement with Janssen, whereby Minerva regained global strategic control of the development of MIN-202 to treat insomnia. Janssen will forego its right to royalties on MIN-202 insomnia sales in Minerva territories, which includes the European Union, Switzerland, Liechtenstein, Iceland and Norway. The effectiveness of this amendment is contingent upon approval by the European commission. Minerva will retain all of its current codevelopment and commercialization rights to MIN-202, including those indications currently under development adjunctive therapy for major depressive disorders, MDD and insomnia. This includes an exclusive license into territories I mentioned, with royalties payable by Minerva to Janssen on sales excluding insomnia sales and royalties of sales payable by Janssen to Minerva elsewhere worldwide. Jeff will discuss the financial terms of the amendment agreement in detail. From a strategic point of view, we believe the amended agreement with Janssen will ensure a more focused and efficient clinical development of MIN-202 and insomnia by Minerva. In addition, the infusion of financial resources under this agreement significantly extends Minerva's financial runway. The next part in the development in MIN-202 includes initiation of 3 Phase IIb trials before the end of 2017. These will include two trials in comorbid insomnia in patients suffering from depressive disorders and one in insomnia without neuropsychiatric co-morbid symptoms. We look forward to advancing our collaboration with Janssen in these indications. Our third clinical stage compound is MIN-117 in development to address unmet medical needs in patients suffering from MDD and presenting with unsure depressive symptoms. Based upon clinical and preclinical findings, we believe MIN-117 may demonstrate a safety profile comparable to placebo, while avoiding many typical side effects of current MDD treatments, including cognitive impairment, sexual dysfunction and sleep disorders. Following the acceptance of the Investigation of New Drug Application, IND, for MIN-117, we're planning a Phase IIb clinical trial with this compound in the U.S. and Europe expected to begin in late 2017. We're planning to include patients who have both mood and anxiety disorders. Finally, our preclinical stage product candidate is MIN-301 to treat Parkinson's disease. MIN-301 is a recombinant protein with the extracellular domain of neuregulin-1 beta, primarily activating the ErbB4 receptor. Dysregulation of neuregulin-1 signaling pathway has been linked to neurodevelopmental and neurodegenerative disorders, including and beyond Parkinson's disease. Preclinically, MIN-301 has been shown to cross the blood vein barrier and to have neuroprotective and neurorestorative effects. The next planned steps in the MIN-301 program are the filing of an IND in the U.S. or an Investigational of Medicinal Product Dossier, IMPD, in Europe and pending acceptance by regulatory authorities in initiation of Phase 1 clinical testing thereafter. In summary, the outcome of our end of Phase II meeting with the FDA and the finalization of an improved formulation provide added impetus as we enter the final months of preparation prior to initiation of the Phase III trial with MIN-101. The amended agreement related to MIN-202 with Janssen, while contingent upon final approval by the European Commission, will help ensure a more focused and efficient clinical development of this compound in both insomnia and MDD. On July 5, 2017, we concluded a public offering of common stock. Net proceeds to Minerva were approximately $41.5 million. We had the opportunity to speak with numerous institutions during this process and we would like to thank all of them for the support of Minerva. During the next few months, we plan to complete preparations for the initiation of the clinical trials with 3 product candidates that I outlined earlier. Geoff will now address our financial results, including the impact upon our financial resources of both the amended agreement with Janssen and the offering of stock.

[Geoff Race:]

Thank you, Rémy. Earlier this morning, we issued a press release summarizing our operating results for the second quarter of 2017. A more detailed discussion of our results may be found in our quarterly report on Form 10-Q filed with the SEC earlier today. Cash, cash equivalents and marketable securities as of June 30, 2017, were approximately $77.6 million compared to $83 million as of December 31, 2016. Two recent events have had a positive impact on our cash position following June 30. The first of these was the amendment to the codevelopment and license agreement with the Janssen relates to MIN-202 that Rémy mentioned. This amendment and the stock repurchase provided for therein are conditional upon approval by the European Commission. Key financial terms of this agreement include cash payments to Minerva by Janssen of up to $70 million, including $30 million upfront, $20 million at the start of the Phase III insomnia trial with MIN-202 and $20 million when 50% of the patients are enrolled in this trial. In addition, Janssen will waive the remaining payments due from Minerva to the completion of Phase II development of MIN-202, which total approximately $13 million. The previous agreement provided that Minerva would contribute 40% of the Phase III development costs. Following execution of the amendment, Minerva will now assume strategic control of the insomnia program and accordingly all Phase III development costs. All Minerva stock currently owned by Johnson & Johnson Innovation, JJDC, Inc. totaling approximately 3.9 million shares and representing approximately 10% of total Minerva shares outstanding at June 30, will be repurchased by Minerva at par value of $0.0001 per share or approximately $389 in total. The second event that had an impact on our finances was our closing on July 6, 2017, of a public offering of 5,750,000 shares of common stock, including 750,000 shares sold pursuant to the underwriters' full exercise of their option to purchase additional shares at a price to the public of $7.75 per share. Net proceeds to Minerva from the offering were approximately $41.5 million. Research and development expenses were $7.1 million in the second quarter of 2017 compared to $2.7 million in the second quarter of 2016, an increase in total expense of $4.4 million. R&D expense in the three months ended June 30, 2017 and 2016 included non-cash stock-based compensation expenses of $0.5 million and $0.2 million, respectively. This increase in R&D expenses primarily reflects higher development expenses under the MIN-202 program for Phase II clinical trial preparation, increased expenses for the MIN-101 program and an increase in non-cash stock-based compensation expenses. These amounts were partially offset by reduced costs related to our Phase IIa clinical trial of MIN-117 due to its completion in May 2016. For the six months ended June 30, 2017, R&D expenses were at $14.8 million compared to $8.1 million for the six months ended June 30, 2016, an increase in total expense of $6.7 million. R&D expense in the six months ended June 30, 2017 and 2016, included non-cash stock-based compensation expenses of $1 million and $0.5 million respectively. This increase in R&D expense is primarily reflects higher development expenses under the MIN-202 program for Phase II clinical trial preparation, increased expenses for the MIN-101 program and an increase in non-cash stock-based compensation expenses. These amounts were partially offset by reduced costs related to our Phase IIa clinical trial at MIN-117 due to its completion in May 2016. General and administrative expenses were $2.6 million in the second quarter of 2017 compared to $2.3 million in the second quarter of 2016, an increase of approximately $0.3 million. G&A expense in the three months ended June 30, 2017 and 2016, included non-cash stock-based compensation expenses of $0.7 million and $0.6 million respectively. This increase was primarily due to an increase in professional fees during the three months ended June 30, 2016. For the six months ended June 30, 2017, G&A expenses were $5.5 million compared to $4.6 million for the same period in 2016, an increase of approximately $0.9 million. G&A expense in the six months ended June 30, 2017 and 2016 included noncash stock-based compensation expenses of $1.5 million and $1.2 million respectively. This increase was primarily due to an increase in professional fees during the six months ended June 30, 2017. Net loss was $9.8 million for the second quarter of 2017 or a loss per share of $0.27 basic and diluted compared to a net loss of $5.2 million or a loss per share of $0.18 basic and diluted for the same period in 2016. Net loss was $20.4 million for the first six months of 2017 or a loss per share of $0.57 basic and diluted as compared to a net loss of $13.2 million or a loss per share of $0.47 basic and diluted for the first six months of 2016. Now I'd like to turn the call over to the operator for any questions. Operator?

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Jason Butler with JMP Securities. You may begin.

[Jason Butler:]

Thanks for taking the questions. Just a couple. First on MIN-101. Rémy, can you talk a little bit about the screening process and running process that you'll employ in the Phase III trial versus what you used in Phase IIb?

[Remy Luthringer:]

Thank you for the question, Jason. So basically the screening process is exactly the same. The only small difference is that when we are checking about the stability of the symptoms over a period of six months compared to three months, which was the case in the Phase IIb. But for the rest, I mean, the eligibility criteria is exactly the same as the duration of the bridging from the previous treatment to our treatment will be the same. So, all is really the same at the end of the day.

[Jason Butler:]

Okay. Great. And then for 117, just thinking about the potential benefit on anxiety. Do you have an estimate yet of what proportion of the MDD population has a significant level of anxiety as well?

[Remy Luthringer:]

Yes. So this is again a great question. I think the numbers are depending on the meta-analysis, which are done [indiscernible]. But I mean, what comes out is that the significant part of this population has definitely anxiety and there is something which is very important to keep in mind is that when you are initiating a treatment with an antidepressant and SSRI and SNRI or another treatment with a different mechanism of action, you have a period of time between initiation of treatment and the effect of mood where I mean, the patients are becoming quite anxious, as you know, the response we have today is a response to give some benzodiazepines and anxiolytics and this clearly demonstrated that this period is really how to say, key and I mean benzodiazepines are not helping a lot. So, I think there are two aspects, a significant part of patients with MDD have anxiety. And in addition, in order to get the best response to depression something different from benzodiazepines would be very beneficial. So this is the reason why we are so excited about having this effect on anxiety in the Phase IIb trial and to check this in the Phase IIb trial, I wanted to say Phase IIa before I said Phase IIb trial, which would start.

[Jason Butler:]

Great. And then just the last question for Jeff. In terms of EC approval of the 202 amendment, can you just speak to timelines there versus the August 31 deadline you have in the 10-Q. Can that deadline be moved at all? Or you're confident that you'll get something from the EC in August?

[Geoffrey Robin Race:]

So we're talking to the EC at present and obviously, I can't give you an exact date as to when they'll be complete in terms of the review, but we expect it to be before the end of August.

[Jason Butler:]

Okay, great. Thanks for taking my question.

[Operator:]

[Operator Instructions]. I'm showing no further questions at this time. I'll turn the call back over to Remy Luthringer for closing remarks.

[Remy Luthringer:]

So thank you all for your participation in today's call, and we're really looking forward to updating you on our progress in the near future. Thank you so much and have a nice day.

[Operator:]

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