Minerva Neurosciences, Inc.
Q3 2017 Earnings Call Transcript

Published: 6 Nov 2017

[Operator:]

Welcome to the Minerva Neurosciences Third Quarter 2017 Conference Call. At this time, all participants are in listen-only mod. There will be a question-and-answer session following today’s prepared remarks. 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 third quarter 2017 financial results became available at 7

[Dr. Remy Luthringer:]

Thank you, Bill, and good morning, everyone. Thanks for joining us today. I am pleased and excited to inform you that we continue to make a good progress as we complete preparations for the initiation of advanced clinical stage efficacy trials with three product candidates MIN-101, MIN-202, also known as seltorexant and MIN-117. All of these products target significant unmet medical needs, highlighted by MIN-101 for the treatment of negative symptoms in patients diagnosed with schizophrenia, and unmet medical need for which no treatment is currently available. Our overall objective and primary focus is to ensure that our trials are rigorously conducted with the same high-level of attention and expertise as in our earlier trials, particularly the Phase 2b for MIN-101. In this way, we believe that the data generated will support a timely transition to regulatory review and commercialization, beginning with MIN-101. We’re looking forward to initiating our pivotal Phase 3 trial with MIN-101 before the end of the year. So, final protocol for this trial has been submitted as part of the IND and we have received the first Institutional Review Board, IRB approval for the study in the U.S. Of particular note, the trial design merits is the design of our successful Phase 2b trial. The trial will include, a12-week, three months randomized double-blind placebo-controlled core period followed by a 40-week nine months open label extension period. The primary endpoint will be improvement in negative symptoms as measured by its Marder score for negative symptoms, which is extracted from the PANSS scale and unlike the pentagonal score used in the Phase 2b trial, includes an item which more accurately correlates with functional outcome and benefit in patients. A post-op [ph] analysis of our Phase 2b data using the Marder score shows larger effect sizes and p-values related to placebo as compared to the pentagonal scale used in that trial. The two doses to be tested will be the same as those into Phase 2b study, 32 milligrams and 64 milligrams as we administered once daily. We expect to enroll approximately 500 patients at approximately 60 clinical sites across the U.S. and Europe with 30% of patients coming from the U.S. In addition, we have initiated the chemistry, manufacturing and controls, CMC, program for MIN-101 to ensure its timely inclusion in the potential submission of an NDA, pending a successful Phase 3 data readout. Over the last six months, we have taken a detailed and systematic approach to assessing the capabilities of clinical sites, so that we recruit the right patients for this trial. We are placing a special emphasis on gaining access to patient disease histories, which we believe will help ensure the quality of patients screening. Specifically, we will be enrolling patients, who are symptomatically stable for several months with moderate-to-severe negative symptoms as measured by score of 20 or greater on the PANSS negative symptom scale and stable positive symptoms. We believe that this eligibility criterion represents a significant portion of the overall patient population suffering from schizophrenia and having negative symptoms, resulting in the inability to function well in everyday life. We expect top line results from the three months double-blind phase on this trial in the first half of 2019. In 2018, our R&D team will focus its attention on execution of this key Phase 3 study. In addition, we will continue our extensive interactions with key opinion leaders, which began after the readout from our Phase 2b study. Furthermore, we are expecting additional scientific publications in the near future that will elaborate on several topics initially addressed in the recent publication of Phase 2b data in the American Journal of Psychiatry. We are also making a good progress in evaluating and defining market size and potential of MIN-101 and we plan to communicate related details next year. MIN-202 also known as seltorexant is our second clinical stage product. This is a selective orexin-2 receptor antagonist under development in partnership with Janssen Pharmaceutica NV, Janssen. The first patient was enrolled during the past quarter in a Phase 2b trial of seltorexant as adjunctive therapy to antidepressants in adult patients with major depressive disorders, MDD. These patients have not responded well to their existing antidepressant therapies. We plan to enroll approximately 280 patients in this double-blind randomized parallel group placebo-controlled, adaptive dose finding clinical trial at more than 85 clinical sites in the U.S., Europe, Russia and Japan. The trial consists of three phases, a screening phase lasting up to four weeks, a six-week double-blind treatment phase and a two-week post-treatment follow-up phase. The primary objectives of this trial are to assess the dose response relationship and antidepressant effects of up to three doses of seltorexant compared to placebo and to continue to assess its safety and tolerability. Two additional clinical trials of seltorexant are planned for initiation in the fourth quarter of this year. These include a second Phase 2b trial in MDD and the Phase 2b trial in insomnia. We believe these three studies will reconstitute a significant Phase 2b package of both insomnia and MDD, and pending the successful completion, will help in the design of Phase 3 programs for both indications. An amendment to the Company’s co-development and license agreement with Janssen became effective on August 29, 2017, following approval of its terms by the European Commission. Moving on to MIN-117, our Phase 2b clinical trial preparation has started and we plan to initiate patient recruitment in early 2018. We’ll include patients with MDD who also has symptoms of anxiety, thus building upon Phase 2a clinical results that showed effects in both depressive symptomatology and anxiety. In preparation for the Phase 2b trial, we expect top-line results from the completed clinical portion of the full effect study to be enable in the near future. Finally, we are continuing to conduct preclinical toxicology and other IND-enabling studies with our preclinical stage product candidate, MIN-301. The studies prepare the way for regulatory filings in the U.S. or Europe that will allow us to advance this compound into initial stage of clinical development. MIN-301 is a recombinant protein with the extracellular domain of neuregulin-1 beta primary activating the ErbB4 receptor. Dysregulation of NRG-1 signaling pathway has been linked to neurodevelopmental and neurodegenerative disorders, including and beyond Parkinson’s disease. In summary, we have embraced the endeavor of conducting the pivotal Phase 3 trial with MIN-101 with the potential to alter the treatment landscape of schizophrenia. We recognize the burden of this disease on patients and the families. We also recognize that we have the potential to deliver a new treatment for the significant unmet need posed by negative symptoms in patients suffering from schizophrenia and beyond. We are highly focused on the successful execution of the pivotal Phase 3 trial, with MIN-101 as well as our other trials, and look forward to providing updates on our progress during the coming years. I will now turn over to Geoff, who will address our financial results.

[Geoff Race:]

Thank you, Remy. Earlier this morning, we issued a press release summarizing our operating results for the third 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 September 30, 2017 were approximately $143.3 million, compared to $83 million as of December 31, 2016. We received $30 million cash upfront payment on August 29, 2017, following European Commission approval of the amendment to the seltorexant co-development and license agreement with Janssen. The $30 million payment and $11.2 million in previously expensed and accrued collaborative expenses, which were forgiven upon the effective date of the agreement, will be earned and recognized as revenue as the services are performed from the commencement of Phase 3 development to the completion of the development activities using the proportion of performance method. The $41.2 million was recorded as deferred revenue as of September 30, 2017. We also closed the public offering of common stock on July 5, 2017 that resulted in net proceeds to Minerva of approximately $41.6 million. Research and development expenses were $9 million in the third quarter of 2017 compared to $5.9 million in the third quarter of 2016. R&D expense in the three months ended September 30, 2017 and 2016 included non-cash stock-based compensation expenses of $0.5 million and $0.3 million, respectively. This increase in R&D expenses primarily reflects higher development expenses under the seltorexant program for Phase 2 clinical trials, increased expenses for the MIN-101 program and an increase in non-cash stock-based compensation expenses. For the nine months ended September 30, 2017, R&D expenses were at $23.7 million compared to $13.9 million for the nine months ended September 30, 2016. R&D expense in the nine months ended September 30, 2017 and 2016 included non-cash stock-based compensation expenses of $1.5 million and $0.7 million, respectively. This increase in R&D expenses primarily reflects higher development expenses under the seltorexant program for the Phase 2 clinical trial. Increased R&D expenses also included higher expenses for the MIN-101 program and increase in personnel costs and an increase in non-cash stock-based compensation expenses. These amounts were partially offset by lower costs due to the completion of the Phase 2a clinical trial of MIN-117. General and administrative expenses were $2.5 million in the third quarter of 2017 compared to $2.4 million in the third quarter of 2016. G&A expense in the three months ended September 30, 2017 and 2016 included non-cash stock-based compensation expenses of $0.8 million and $0.7 million, respectively. This increase was primarily due to an increase in professional fees during the three months ended September 30, 2017. For the nine months ended September 30, 2017, G&A expenses were $7.9 million compared to $7 million for the same period in 2016. G&A expense in the nine months ended September 30, 2017 and 2016 included non-cash stock-based compensation expenses of $2.3 million and $1.8 million, respectively. This increase was primarily due to an increase in professional fees and an increase in non-cash stock-based compensation expenses during the nine months ended September 30, 2017. Net loss was $11.3 million for the third quarter of 2017 or a loss per share of $0.28 basic and diluted compared to a net loss of $8.4 million or a loss per share of $0.24 basic and diluted for the same period in 2016. Net loss was $31.7 million for the first nine months of 2017 or a loss per share of $0.84 basic and diluted as compared to a net loss of $21.6 million or a loss per share of $0.71basic and diluted for the first nine months of 2016. Now, I’d like to turn the call over to the operator for any questions. Operator?

[Operator:]

Certainly. [Operator Instructions] Our first question comes from the line of Jason Butler from JMP Securities. Your question, please?

[Jason Butler:]

Hi, thanks for taking my questions. Just a couple on seltorexant. First, Remy, are you able to give us any color on the differences in trial design between the two different Phase 2b MDD trials?

[Dr. Remy Luthringer:]

So, the two trials, I mean, one trial is really focusing on finding the final doses -- or the final doses of final doses which will be pushed into Phase 3. So, this is really a dose finding trial. While the second trial is an exploratory trial, which is really trying to differentiate between adding seltorexant to an MDD depressant versus standard of care in order to really position well our molecule compared to standard of care.

[Jason Butler:]

Okay, helpful. And then, are we going to get results from all three seltorexant trials, the insomnia or MDD trials in 2018 or do you not have that visibility yet?

[Dr. Remy Luthringer:]

No, I think as we have really disclosed over the past, I mean, these trials will read out in the first half of 2019, Jason. So, you never know how clinical trials are going, but I mean, in the first half of 2019 is the target here.

[Jason Butler:]

Okay, great. And then just, lastly, Geoff, can you just remind us what the contribution per the amended agreement with Janssen is for the -- for costs for the insomnia program?

[Dr. Remy Luthringer:]

So, Geoff, can you take this one?

[Geoff Race:]

Yes, certainly. So, thanks for the question, Jason. We have no further contribution to make to the seltorexant program until the Phase 2b studies are completed.

[Jason Butler:]

Okay, great. That’s helpful. Thanks a lot for taking questions.

[Geoff Race:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Joel Beatty from Citi. Your question, please?

[Joel Beatty:]

Hi. Good morning and thanks for taking the questions. The first one is on the MIN-101 Phase 3 trial. With the new sites that will be coming on line compared to the Phase 2 trial, what are you doing to ensure a level of consistency between the sites, both with regards to enrolling the right patients and then also in assessing the response to patients?

[Dr. Remy Luthringer:]

So, Joel, great question and very important question. As I tried to really highlight that we’re really taking all the precautions here in getting the right patients into the study. So, to ensure that we have right patients because as a primary end-point, you’re looking to negative symptoms, you have to ensure that the negative symptoms are present over time before you’re enrolling the patients into the study. So, what it means, it means that you have really a lot of work to be done and which has been done since the readout of the Phase 2b and the start of the Phase 3, is to ensure that you have access to sites or to PIs who have really access to the history of the patients who will be included at the end of the day, in the study. So, this is I think the real key factor. The second factor in order to get a good readout or consistent readout is ready to come up with an extensive training of all the PIs in order to bring them to the same level of expertise and not only at the beginning of the study, but during the course of the study. So, what we will do we, will reinsure our homogeneity in terms of scoring and of negative symptoms and the overall PANSS scale, but also the additional scales like the GI and the PSP scale. But, we will also check obviously completely blinded during the study as a factor, I mean all the sites, all the PIs occurring in the same way all along during the course of the study. So, this I think are the two key factors of success at the end of the day.

[Joel Beatty:]

Great. And another question is related to finances. Are you able to give a sense of if your current cash position will be sufficient to fund Minerva through the Phase 3 results in the first nine of 2019?

[Dr. Remy Luthringer:]

Geoff, can you take this one?

[Geoff Race:]

Yes. Thanks for the question, Joel. We don’t normally give guidance with regard to financial runway other than to say that our cash will extend beyond the next 12 months. But, what I can say is we certainly have enough cash with the $143 million to fund the $101 Phase 3 study.

[Joel Beatty:]

Great. And then, one last question just related to cariprazine which Allergan had filed for approval in the treatment of negative symptoms schizophrenia and in Q3 received a refuse to file letter from FDA. Could you discuss a little bit about how your Phase 3 program for MIN-101 is different and could support a potential approval compared to the path was taken for cariprazine?

[Dr. Remy Luthringer:]

Yes, Joel. Obviously, I will not comment about the cariprazine. But, I think basically in order to get the approval for negative symptoms in patients with schizophrenia, you have to demonstrate that you a specific effect for negative symptoms. So, in other words because there is no approved drug currently available, second because all the treatments currently in the market even they are not approved for negative symptoms, they have side effects. So, you have really to ensure that these two confounding aspects are not in the trial. So, basically, the only way in order to demonstrate that you have a specific effect on negative symptoms is to compare the drug versus placebo keeping in mind that the drug should be devoted of side effects. This is a case with MIN-101. As you know, we have no sedation with the molecule, we have no expected [ph] other symptoms with the molecule and we were able to show as maintenance of positive symptoms at the same level during the course of the trial; I am talking about the Phase 2b trial. So, having all this in mind, if we are able in Phase 3 to have the same readout with the same comparison versus placebo for the two doses, we will use in the Phase 3 study, I think here you can really come to the conclusion that you have a specific effect and you can hopefully file for an NDA filing because this is a way to do in order to claim an effect on negative symptoms.

[Operator:]

Our next question comes from the line of David Sherman from LifeSci Capital. Your question please.

[David Sherman:]

Hi, guys. Thanks for taking my question. I was just wondering if you could give a little bit more color on the Phase 2b study for insomnia. What are you going to be testing there and what will it add to your Phase 2 program for 202?

[Dr. Remy Luthringer:]

So, thank you for the question. So, what the Phase 2b in insomnia will provide us is again dose finding. So, we will test several doses in order to really narrow down the therapeutic dose, which should push into Phase 3. So, it’s really a dose finding study with several doses in patients suffering from insomnia without psychotic disorders. So, this is the purpose of the study.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Biren Amin from Jefferies. Your question, please?

[Biren Amin:]

Yes. Thanks for taking my questions. Maybe just on the Phase 3 trial. How do you think clinicians would view the PANSS Marder from a clinical relevance standpoint?

[Dr. Remy Luthringer:]

So, I think what we clinicians or KOLs are looking for is to have a treatment for negative symptoms because there is nothing available. But I think -- and this, I think it is important to understand that what the authorities are looking for is really to show an effect or significant effect on negative score coming out from the PANSS scale, and in this case from the extracted Marder scores. But, I mean obviously, as you know and this is enough to get approval. But as you know, negative symptoms are probably in addition of cognitive impairment as the main contributors to the really bad functional outcome in these patients; so, the fact that these patients are not able to cope with their daily life. So, the difference, as explained already, between the Marder score and the score we have used into Phase 2b study which was a pentagonal score is that there is an item which is called a J16 item from the PANSS scale which is looking to the ability of the patients to interact socially. And I think, this is the advantage of the Marder scale; it gives a such kind of window. It opens a window of how the patient is improving on a functional level. So, this is a reason why I mean we have proposed the Marder scale and discussed this with the FDA.

[Biren Amin:]

Got it. And then, I think you’re also allowing patients that are on previous antipsychotic medications. And they’ll be switched over to MIN-101 at time of enrollment in the study. Is there a significant washout period between the switch from their prior psychotic med to MIN-101?

[Dr. Remy Luthringer:]

Again, a great question. So, the switch from the previous treatment to MIN-101 is very short, it’s a question of few days just. And why this is a very simply, because I mean we try as much as possible to mimic as the condition or as the clinical situation once the drug will be in the market. And this has also been discussed in lengths with the authorities. So, here what we are doing, yes indeed, you need to have the patient who is not responding well in terms of negative symptoms, which is previous treatment is a switch to MIN-101 after a very short washout period. And afterwards, he goes back to his normal place of living, which is also an important factor; so, because we want really to avoid confounding factor. So, it is a very day-to-day approach in order to really mimic what will happen once the drug is in the market.

[Biren Amin:]

Got it. And then, just a question on the seltorexant, the second exploratory trial in MDD. Is this kind of the sequential parallel compare design as we’ve seen some other companies use? And what endpoints are you evaluating in that trial, and if it’s a Marder’s type endpoint, are you going to control for variability like we’ve seen [indiscernible] do this by averaging the Marder’s score in the last few weeks of the trial?

[Dr. Remy Luthringer:]

No. This is -- I mean, sometimes to keep it simple is best, if you want to test and hypothesis of this is parallel group design and the endpoint will be the end of treatment versus -- comparison, versus the different conditions which are exploratory. So, very simply, straight forward design, nothing sophisticated there.

[Operator:]

Thank you. And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to William Boni for any further remarks.

[William Boni:]

Thank you everybody for joining us on the Q3 call. And we look forward to our ongoing dialogue in the weeks and months to come. Have a great day. Take care. Bye, bye.

[Operator:]

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.