Minerva Neurosciences, Inc.
Q4 2017 Earnings Call Transcript

Published: 12 Mar 2018

[Operator:]

Welcome to the Minerva Neurosciences Year End 2017 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. 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 year end 2017 financial results became available at 7

[Remy Luthringer:]

Thank you, Bill and good morning everyone. Thanks for joining us today. We began 2018 with four clinical trials underway with two product candidates and we are planning to begin a fifth trial with a certain product candidate in the near future. These advancements have been made possible by the extensive preparatory work and regulatory interactions that were completed during 2017. 2018 will be year marked by clinical trial execution leading to data readouts anticipated in 2019. We believe the designs and protocols that we have put in place will help maximize the probability of success in these trials and further defined innovative product profiles for our compounds beginning with MIN-101. I am pleased to inform you that MIN-101 has now been assigned its generic name, roluperidone. I will use this identifier today and going forward instead of MIN-101. In December 2017, we initiated the pivotal Phase 3 clinical trial of roluperidone as monotherapy for negative symptoms in patients diagnosed with schizophrenia. This multi-center randomized, double-blind, parallel-group, placebo-controlled, 12-week study is designed to evaluate the efficacy and safety of 32 milligrams and 64 milligrams of roluperidone in other patients. So 12-week study will be followed by a 14-week open label extension period during which patients on drug will continue receiving their original dose and patients on placebo will receive either 32 milligrams or 64 milligrams of active drug. The effect of roluperidone as compared to placebo will be determined with respect to the primary end point, the change from baseline in negative symptoms using the positive and negative syndrome scale and Marder’s negative symptoms factor score NSFS over the 12-week double blind treatment period. The key secondary endpoint is the effect of roluperidone compared to placebo as measured by the change from baseline in the Personal and Social Performance PSP total score over the same period. Additional secondary endpoints will be the Clinical Global Impression of Severity CGI-S score and safety and tolerability. Approximately 500 patients will be enrolled at approximately 60 clinical sites in the U.S. and Europe. With about 30% of patients coming from the U.S., we expect to readout top line results from the trial in the first half of 2019. The initiation of this trial is an important milestone for Minerva. Patients with schizophrenia lack a treatment specifically directed towards negative symptoms for which no adjunct has been approved. We believe that roluperidone could address these negative symptoms while stabilizing positive symptoms. Later in this call, Rick Russell will speak briefly about the progress we are making in the important work of evaluating and defining the market size and commercial opportunity of roluperidone. Seltorexant, also known as a mean to a tool is our second clinical stage product under development with Janssen Pharmaceutica for the treatment of insomnia disorder and major depressive disorder MDD. During 2017 three Phase 2b clinical trials were initiated with seltorexant. Two of these trials are in MDD and one is in insomnia disorder. These trials build upon previously announced clinical findings that indicate improvements in depressive symptomatology and sleep. Details of these trials can be found in the morning’s press release and on clinicaltrials.gov. We expect top line data results from these trials in 2019. In August 2017 and amendments to our agreement with Janssen for seltorexant became effective. Under the amended agreement Minerva has assumed strategic control for the Phase 3 development of this compound in insomnia that has no further financial obligations until the Phase 2b development milestone is completed for both indications. This agreement also advances our collaboration with Janssen on the broad development of this compound which also includes major depressive disorder. Moving on to MIN-117 we anticipate that our Phase 2b trial in MDD will begin shortly. We plan to recruit patients with MDD who also have symptoms of anxiety thus building upon Phase 2a clinical results that show the effects in both depressive symptomatology and anxiety. While existing therapies for MDD are available, their effectiveness is limited due to an acceptable side effects, particularly cognitive impairment and sexual dysfunction. Patient also exhibit varying biological phenotypes thus preventing an acceptable level of remission of depressive symptoms in many patients treated with currently available therapies. These shortcomings learnt is an exploration of new treatment strategies with molecules such as MIN-117 that assess an innovative pharmacological profile. In addition to the primary endpoint of reducing the symptoms of major depression, we plan to assess anxiety, sleep, cognition and sexual function to further define the product profile of MIN-117 as an adjunct 0443 so it can potentially address these shortcomings. In addition to our clinical stage portfolio, we are developing pre-clinical candidates MIN-301, a soluble recombinant form of the neuregulin-1 beta-1 or NRG-1 beta-1 protein, for the treatment of Parkinson’s disease. We believe MIN-301 has the potential to be disease modifying in patients suffering from Parkinson’s disease and potentially other neurodegenerative disorders. Preclinical toxicology and other IND-enabling studies are ongoing. We expect the studies will serve as a basis for regulatory filings in the U.S. or Europe, that if approved would allow us to move this company forward into the clinic. In summary, we are at an important point in the corporate evolution of Minerva as we launch advanced stage clinical trials with three product candidates. Each one has significant potential to improve the lives of large numbers of affected patients by addressing critical unmet needs not addressed by currently available treatment. 2018 will therefore be a year focused on patient recruitment and clinical trial execution. Our entire R&D team is highly focused on including the right patients with these studies and on the rigorous assessment of therapeutic efficacy. We expect data readouts from the 5 separate trials I have discussed in 2019. I would now like to introduce Rick Russell who joined Minerva in December. Rick brings to his position as President of Minerva significant commercial expertise. He is a timely addition to our team as we look to ensure the effective transition from late stage clinical development to the market for our product candidates led by roluperidone.

[Rick Russell:]

Thank you, Remy. It’s a pleasure to join the Minerva team and to participate in today’s conference call. The burden of disease and the market potential for each of Minerva’s products are significant. Patients in each of our targeted indications, schizophrenia, MDD, insomnia and Parkinson’s disease are not well-served by existing therapies. We believe our product candidates are differentiated from available therapies. We also believe their novel mechanisms represent innovative approaches to addressing unmet needs. I will focus my brief comments today on the general target market for roluperidone, the company’s most advanced clinical asset. Negative symptoms are ranked by doctors as the number one unmet medical need for patients with schizophrenia according to recent Datamonitor survey information. Number two is improved tolerability for drug treatment. Based on clinical data generated to-date, we believe roluperidone, a product whose administration has resulted in observed improvement in negative symptoms, stability in positive symptoms and a favorable side effect profile addresses these needs directly. Published studies estimate that 1.3 million individuals are diagnosed and treated for schizophrenia in the U.S. This represents 53% of the total population of 2.2 million who suffer from this debilitating condition. Of these, approximately 69% or 920,000 individuals have negative symptoms and approximately 85% of those or 780,000 individuals have varying severity of negative symptoms and are stable over a 6-month period. We also know that positive symptoms can fluctuate and tend to be more episodic with acute episodes of psychosis or hallucinations, which declined in frequency and severity over time. Conversely, negative symptoms are typically more persistent and can increase over time contributing to disability and overall burden of disease. Approved anti-psychotics which directly target the dopamine receptor have shown efficacy only against positive symptoms and none of them are indicated for negative symptoms. Additionally, we believe among prescribers, there is a low level of satisfaction with current treatment options and a growing recognition of the need for new therapies. So given these factors, we believe the target market for roluperidone is substantial and that the drug is differentiated from current treatment states on its mechanism of action, clinical effects and of course the targeted indication. As a monotherapy targeting negative symptoms in the chronic or maintenance phase of the disease, it’s unique in the late stage pipeline of products to treat schizophrenia. And with that, I will turn it over to Geoff.

[Geoff Race:]

Thank you, Rick. Earlier this morning, we issued a press release summarizing our operating results for the first quarter and year ended December 31, 2017. A more detailed discussion of our results maybe found in our Annual Report on Form 10-K filed with the SEC earlier today. Cash, cash equivalents and marketable securities as of December 31, 2017 were approximately $133.2 million compared to $83 million as of December 31, 2016. We expect that the company’s existing cash and cash equivalents will be sufficient to meet its anticipated capital requirements for at least the next 12 months from today and into 2020 based on our current operating plan. The assumptions upon which this estimate is based are routinely evaluated and maybe subject to change. During 2017, the company received approximately $41.6 million in net proceeds from a July public offering of common stock, proceeds of $9.4 million from the exercise of common stock warrants, proceeds of $1.1 million from the exercise of common stock actions and $30 million in an upfront payment in connection with the amendment to the company’s co-development and license agreement with Janssen. Research and development expenses were $6.5 million in the fourth quarter of 2017 and 2016. R&D expenses were $30.3 million for the year ended December 31, 2017 compared to $20.4 million for the year ended December 31, 2016. Of the $30.3 million in R&D expenses, $11.2 million represents accrued and unpaid expenses incurred during 2017 under the collaboration agreement with Janssen. These accrued expenses were forgiven upon the effective date of the amendment to the co-development and license agreement with Janssen, had no cash impact on Minerva and have been included under deferred revenue on the company’s balance sheet at December 31, 2017. The increase in research and development expenses in 2017 primarily reflects high development expenses under the seltorexant program, increased expenses for the roluperidone program, an 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 $3 million in the fourth quarter of 2017 compared to $2.7 million in the fourth quarter of 2016. G&A expenses were $10.9 million for the year ended December 31, 2017 compared to $9.8 million for the year ended December 31, 2016. The increase in general and administrative expenses was primarily due to an increase in professional fees and an increase in non-cash stock-based compensation expenses. Net income was $0.2 million for the fourth quarter of 2017 or income per share of $0.00 basic and diluted compared to a net loss of $9.4 million for the fourth quarter of 2016 or a less per share of $0.27 basic and diluted. Net loss was $31.5 million for the year ended December 31, 2017 or a loss per share of $0.83 basic and diluted compared to a net loss of $31 million or a loss per share of $0.99 basic and diluted for the year ended December 31, 2016. The net income reported for the fourth quarter of 2017 is the result of tax reform legislation enacted on December 22, 2017 commonly known as the Tax Cuts and Jobs Act. This act resulted in significant modifications to existing law. As a result, benefit for income taxes was $9.4 million in the fourth quarter of 2017 compared to zero in the fourth quarter of 2016. Benefit for income taxes was $9.4 million for the year ended December 31, 2017 compared to zero for the year ended December 31, 2016. Now, I would like to turn the call over to the operator for any questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from the line of Joel Beatty with Citi. Your line is now open.

[Joel Beatty:]

Hello, good morning and thanks for taking the questions. The first one is on the trial of MIN-101, can you discuss a little bit about how you are able to balance being on track for enrollment with enrolling the types of patients you feel are appropriate for the trial and as you have had to make any adjustments or changes to the types of patients you are enrolling? Thanks.

[Remy Luthringer:]

Thank you, Joel and Remy answering this question. I think this is obviously a great question, because as you know, I mean, we already have a lot of chance, because at the end of Phase 2 meeting we had with the FDA, it was clearly discussed that I mean the Phase 3 should be as close as possible to the Phase 2b study we have run. So obviously, we could really learn a lot from the Phase 2b in order to design the right Phase 3. This said as everybody knows I mean in the Phase 3 we will have around 30% of the patients coming from the U.S. and here we put a lot of efforts in this part in order to ensure that the patients who will be enrolled we have access to their history, because when you are dealing with negative symptoms in schizophrenia, you need really to get a good hint about the history of the patients in order to show the stability of the symptoms. So, all this has really focused – the team has focused a lot on this and I really think that we have the right sites in place in the U.S. in order to come up with the right patients with the same patients as patients we will include in Europe. So, this is really something very important. What we obviously also are doing is that we are following this very carefully, each time a patient is identified screened by the sites, we are really helping the site in order to take the right decisions, obviously, the final decisions phase with the PI of the site, but I mean we are really helping here, because it’s a unique approach here we are doing. And what we are also doing in order to ensure that I mean the quality is the same as one we had in the Phase 2b. We have this continuous control of the key outcomes, particularly obviously the PANSS scale, PSP and the CGI in order to really follow how each site is performing in order to come up with the right patients. So, these are really the key aspects we are really taking into account. It could be much longer, but I do not want to take all the time to explain this, but again, I really thank you for this question, because I mean, this is really the key of success. And again, we are really very pleased that we can in Phase 3 learn a lot from the Phase 2b and really reproduce as the same results.

[Joel Beatty:]

Great. Thank you. And then one other question is on seltorexant, could you discuss the mechanism of action of the agent and whether you expect that to help lead to any differentiating features in insomnia or depression and the results that are coming in the first half of next year?

[Remy Luthringer:]

Yes. So, this is also an important question. And obviously, before I mean I started with the team to be interested in seltorexant and to put in place is collaboration with Janssen, we obviously thought a lot about this. And as you know, I mean, our molecule is a specific orexin-2 antagonist, whereas all the other molecules, who are on the market, I mean the molecule and the other molecules in development are dual antagonists, so they are antagonizing orexin-1 and orexin-2 pathway. And I mean, why I was personally so interested in the orexin-2 pathway or just specificity of this pathway is that I think this pathway is enough to induce the effect we hope to see on sleep and here we have already a lot of data coming out from polysomnography, which is objective way to measure sleep. And clearly, it is enough to help patients suffering from insomnia, but more interestingly, it is also already demonstrated with the data we have is that you are able to preserve the sleep physiology and different sleep stages you need to have in order to have what we call restorative sleeps, in other words, deep sleep is maintained. We have no major effect on REM sleeps. All this is really contributing to this restorative sleep that people when they wake up, they function better and they can also be better in terms of cognitive aspects, because with existing treatments, you have often the physiology, which is not there in terms of sleep and you have some impairment during daytime functioning. So, clearly, this was the reason why. What is also interesting is that when you think about dual antagonists we know that the orexin-1 pathway is mostly mediated via dopamine and this brings several side effects by going to mediate something via dopamine, whereas I mean, specific orexin-2 like our molecule is mostly mediated via histamines. And I mean, the side effect profile is definitely much better and the experience we have with our molecule is that the safety or the tolerability profile is extremely good with our molecules. So, there are lot of aspects which are really speaking in favor of orexin – specific orexin-2 sorry – approach. Last but not least, speaking about the mechanism of action, as you know, the hypothesis with orexin is that you are modulating somehow the activation level of the brain. And you have also some impact on the autonomic nervous system, which as you know when there is stress, when there is insomnia, when there is depression is over-activated and is signaling to the brain that something is not going extremely well. You have also HPA axis, which is which is related to all the stress hormones, which is also controlled by the orexin pathway. So by having this specific orexin-2 activity and not having the dual activity and avoiding the orexin-1 antagonism by having a molecule, which is really controlling this over-activity of these different systems I just described, I think you end up with a molecule, which is extremely efficacious in terms of insomnia, but also has a direct effect on mode and this is also something we have demonstrated. So, I think these are really the reason why we have really focused on this molecule and we wanted really to have this development going on with Janssen. So, obviously the future, I mean, the study is currently ongoing. We will test several other aspects like for example what is going on that we have already some hints, but what is going on for example when you wake up someone in the night is he able to cope with standing up going to the bathroom, because this is something which quite often happens, is he able to go back to sleep, this is something we are exploring in addition to the effect on sleep insomnia and on depression. But I mean all these kind of things are very important in order to cover the complete and mathematical need we have today in insomnia and in depression and we know very well that with the diverging molecules we have currently available for insomnia, we have a lot of side effects with cognitive impairment, we have also these difficulties to standup and not to have problems particularly in the elderly. So, there are a lot of attributes of this molecule, which I think make this approach unique.

[Joel Beatty:]

Great. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Jason Butler with JMP Securities. Your line is now open.

[Unidentified Analyst:]

Hi, it’s [indiscernible] for Jason. Thanks for taking the questions. I had couple on roluperidone, can you speak to the importance of the personal and social performance secondary endpoint in Phase 3 and then are there any planned interims in that trial?

[Remy Luthringer:]

So, clearly, I mean just to make this extremely clear to everybody, it is really clear that I mean, roluperidone is the Phase 3 primary endpoint which is a moderate negative score is showing the same effect as what we have seen in the Phase 2b study. I mean this is enough in order to get the drug approved. I mean because it has always been stated that any drug which is improving negative symptoms and more important is basically improving negative symptoms which is our case. This is the grant of approval. This said obviously what everybody hopes is by improving negative symptoms you are also improving functioning or the everyday functioning of the patients that is again able to cope with very simple things like standing up in the morning, taking the shower and being engaged in a more active social life. So this is the reason why I mean we have decided to by discussing this obviously with the FDA to include secondary endpoint like PSP. And PSP is really focusing on how good or what is improvement in terms of functioning in the patients. So, obviously if you have – if you are hitting PSP overall score and obviously you have some sub-scores you will understand better what is the overall effect of the molecule. If you have this, this is obviously an additional layer and we will explain to the prescriber, to the patient and to the families of the patient that I mean you are not only improving these symptoms, but you have also some consequences which are really positive in the everyday life. So this is the reason why we put PSP, but again to get the drug approved is only related and the primary endpoint is the secondary is also hitting and that made as you remember is the Phase 2b we had an effect on PSP. So definitely we know that I mean the molecule is improving function already. I think this will be an added value at the end of the day.

[Unidentified Analyst:]

Okay, great. And then were there planned interims for that trial?

[Remy Luthringer:]

Can you repeat, I did not understand?

[Unidentified Analyst:]

Planned, interims for the Phase 3, do you got kind of any planned interims?

[Remy Luthringer:]

No, we have no interim analysis planned, so if I really got the question this is a 500 patients study and we have no interim analysis planned, definitely not.

[Unidentified Analyst:]

I have the same question for seltorexant in the Phase 2b are there any interims in those trials either MDD or insomnia?

[Rick Russell:]

So, for seltorexant, yes indeed I mean there are some interim analyses which are planned, because the objective of one study in depression and the study in insomnia is to better define the dose ranges or the doses which are the doses we will move forward into Phase 3. So indeed for these two studies indeed there is an interim analysis which is planned and you can adapt to those for Part B of the study if necessary. So this is the reason why we have the interim analysis in order to be as adequate as possible in defining the doses which will be used moving forward into Phase 3.

[Unidentified Analyst:]

Okay, great. And I had a couple of questions on MIN-117, I know you said you are going to start the Phase 2b shortly, but what’s the gating factor for starting that trial and did you have meetings with the regulators following the Phase 2a?

[Remy Luthringer:]

No, I mean the factor is purely technical, I mean to get these different approvals from the SEP committees and this is not something which is actively going on and there is no good reason why I mean we should not get all these approvals, so it’s purely technical. We have defined the sites. We have defined the split between the U.S. and Europe because this will be a study where we have also U.S. sites. So again, it’s purely time to prepare and to be ready by them and we are very close to have the first patients in this study.

[Unidentified Analyst:]

Okay, great. Thank you.

[Remy Luthringer:]

You’re welcome.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from the line of Biren Amin with Jefferies. Your line is now open.

[Biren Amin:]

Yes. Hey guys. Thanks for taking my questions. I noticed on clintrials.gov that with seltorexant there was a trial initiated to look at three different formulations recently, can you just talk about that a little bit the objective of that study and what you are trying to optimize there? Thanks.

[Remy Luthringer:]

So, we are not trying to optimize anything to be very clear. I mean, we defiantly are moving forward as the formulation that we have currently using in the Phase 2b studies and the formulation which have been used in the previous trial. This pre-formulation trial is more a technical trial about evaluating particle size of the finer formulation moving forward. So, this is purely a CMC aspect, but I mean, this particle size is to answer and to be prepared for the filing of the molecule in terms of CMC. But again, I mean this does not change as the PKPD and the pharmacokinetic aspect of the molecule, it is purely to have the data necessary for the CMC dossier. So, definitely nothing we want to change in order to change as the clinical efficacy or to manage something, which is related to the indications we are going after. It’s purely for the CMC dossier.

[Biren Amin:]

Okay. And then for the MDD trials, you are comparing it to quetiapine, how should we think about the objectives? Are you looking at superiority to quetiapine or is non-inferiority the objective for those studies? Thanks.

[Remy Luthringer:]

I think the answer is we are not going after the two aspects. It’s really an exploratory study. This study is a study in order to compare indeed on the descriptive level, the add-on of quetiapine versus the add-on of our molecule in order to have all the elements necessary in order to design the right Phase 3 study. So, this study compared to the two other studies which are extremely well powered. This is an exploratory study in order to pickup the differentiating aspects between seltorexant – sorry, I wanted to say MIN-202, between seltorexant and quetiapine. So, this is the purpose of this study and so clearly to set hypothesis which will be included in the Phase 3 program.

[Biren Amin:]

Okay. And then just in terms of timelines across the three seltorexant studies, which you anticipate reading out first?

[Remy Luthringer:]

I said it will be too early to say which one is reading out first. What is clear is that I mean the three trials are recruiting well and this is really good news. And I think we should stick to what we have always said for the moment, because we are nevertheless in the early part of the recruitment is that I mean the readout of the study will be the first half of 2019 just for the three studies sorry. So today again, I think it’s too early, but thing are really going very well in terms of recruitment. So, this is I think, but I can say today, I think.

[Biren Amin:]

Okay, great. Thank you.

[Remy Luthringer:]

Thank you so much.

[Operator:]

Thank you. And I am showing no further questions. So, this does conclude today’s Q&A session. I would like to return the call to Mr. Remy Luthringer for any closing remarks.

[Remy Luthringer:]

Thank you so much. Thank you for your time and I am really looking forward to give you an update in the very close future. Thank you, again.

[Operator:]

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