Minerva Neurosciences, Inc.
Q2 2016 Earnings Call Transcript

Published: 7 Aug 2016

[Operator:]

Welcome to the Minerva Neurosciences' Second Quarter 2016 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 Investor 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 financial results became available at 7.30 AM Eastern Time today and can be found on the Investors section of our website. Our quarterly report on Form 10-Q was also filed electronically with the SEC this morning and can be found on the SEC's Internet website at www.sec.gov. Joining me on the call today from Minerva are Dr. Remy Luthringer, President and Chief Executive Officer; and Mr. Geoff Race, Executive Vice President, Chief Financial Officer and Chief Business Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind you that today's discussion will include statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. These forward-looking statements are based on our current expectations and may differ materially from actual results due to a variety of factors including without limitation whether any of our therapeutic products will advance further in the clinical trials process; whether, when, and to what extent results from such trials will be available, and whether and when if at all such products will receive final approval from the U.S. Food and Drug Administration or equivalent foreign regulatory agencies, and for which indications whether any of our therapeutic products will be successfully marketed if approved; whether any of our therapeutic product discovery and development efforts will be successful; our ability to achieve the results contemplated by our co-development agreements; management's ability to successfully achieve its goals; our ability to raise additional capital to fund our operations on terms acceptable to us; the sufficiency of our current cash position to fund our operations and general economic conditions. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption 'Risk Factors' in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission on August 4, 2016. Any forward-looking statements made on this call speak only as of today's date, Thursday, August 4, 2016 and the company disclaims any obligation to update any of these forward-looking statements to reflect events or circumstances that occur after today's call, except as required by law. I would now like to turn the call over to Remy Luthringer.

[Remy Luthringer:]

Thank you, Bill and good morning everyone. Thank you for joining us today. I am very pleased to report that positive clinical data from two trials with MIN-101 in schizophrenia and MIN-117in major depressive disorder was the highlights of the second quarter of 2016 for Minerva.So the company is preparing to move forward into next stage of clinical development with these products. This data significantly strengthens the profiles of both compounds and underscore a significant potential to transform the therapeutic landscape in schizophrenia and major depressive disorder by addressing unmet needs of patients suffering from these diseases.2016 has been a highly productive year-to-date. Minerva had positive data readouts with three molecules MIN-101,MIN-117 and MIN-202 for four different trials. So company also completed a public offering of common stock, on June 17 resulting in net proceeds of approximately $53.7 million. These resources will support the continued clinical development of these three compounds as well as the preclinical development of MIN-301 for Parkinson's disease. Let me now review for you, our most recent data in more detail beginning with the MIN-101 Phase 2b study carried out in patients suffering from schizophrenia. A total of 244 patients were enrolled in our randomized placebo-controlled double-blind parallel-group design prospective Phase 2b clinical trial. The core study which was a double-blind treatment period of the trial was carried out over 12 weeks. So primary objective was improvement in negative symptoms in patients treated with two doses of MIN-101 32 and 64 milligrams administered, once daily in the morning compared to placebo. This improvement was measured by the change from baseline in the Positive and Negative Syndrome Scale, PANSS, negative subscale score calculated according to the pentagonal model over 12 weeks of treatment, 12 weeks being the primary end point. No approved treatment is currently available for negative symptoms which affect most schizophrenic patients can persist over their lifetimes and ultimately defined both the course of the disease and patients' ability to enjoy the productive social life. So, primary objective of this trial was achieved. Data demonstrated clinically and statistically significant improvements for both doses of MIN-101.For 32 milligram the P value was inferior or equal to 0.022, effect size of 0.45 for 64 milligrams the P value was inferior or equal to 0.003, effect size of 0.58. So benefit of treatment with both doses of MIN-101 over placebo was also measured on the PANSS three factor negative symptom scale. So, negative score measured from the seven negative score questions of PANSS. For 32 milligrams the P value was inferior or equal to 0.006, effect size of 0.55. For 64 milligrams the P value was inferior or equal to 0.001, effect size of 0.7. The improvements in negative symptoms were cognizant with improvements in most of the secondary and exploratory endpoints like CGI-I and S Clinical Global Impression of Improvement and Severity respectively but Brief Assessment of Cognition in Schizophrenia and PSP, Personal and Social Performance. Positive symptoms were observed to remain stable and total PANSS score improved.MIN-101 was reported to be well tolerated and the incidence and types of side effects did not differ significantly between the MIN-101 and placebo groups. No weight gain, no EPS Extra-Pyramidal Symptoms and no sedations were observed. Two patients out of 162 received MIN-101 while this continued based on QTcF prolongation both in the higher dose. In summary, due to the effect that MIN-101 was reported to be well tolerated with a benign side effect profile and due to the stability of positive symptoms observed over the course of the treatment period. So, data from this trial indicated a direct effect on negative symptoms resulting from treatment with MIN-101 rather than in un-direct effect. To the best of our knowledge this is the first time that such a direct effect on negative symptoms has been demonstrated in patients suffering from schizophrenia. Complete results from this study are planned for publication and submission to peer-reviewed forums in the near future. A number of patients who completed the core 12-week study entered into an ongoing 24-week open label extension period during which they’re receiving either 32 or 64 milligram of MIN-101. Patients who received placebo in the core study were randomized to one of these two doses. This extension phase is expected to be completed during the third quarter of 2016. Thereafter we plan to meet with Regulatory Authorities regarding the design of pivotal clinical trials. In summary, the final results from the Phase 2b trial represent a similar achievement in the advancement of MIN-101.We look forward to sharing our plans for its advancement in pivotal clinical testing, pending discussions with Regulatory Authorities. The second data results that occurred during the second quarter was for Phase 2a,a randomized double-blind parallel-group placebo and active control clinical trial with MIN-117.A total of 84 patients with MDD were enrolled in this trial across four treatment arms which included 0.5 and 2.5 milligram daily of MIN-117, 20 milligram daily of paroxetine and placebo. As established prospectively, this trial was designed for signal detection and effect size estimation and was not powered to demonstrate statistically significant differences between MIN-117 and placebo. So, primary endpoint was achieved with data showing that MIN-117 reduced the symptoms of a major depressive episode as measured by the change from baseline in the Montgomery-Asberg Depression Rating Scale, MADRS, total score over six weeks of treatment. Results demonstrated dose-dependent superiority of MIN-117 over placebo. The 0.5 milligram daily dose had an effect size as compared to placebo of 0.24, while the 2.5 milligram daily dose had an effect size of 0.34. Improvement in the MADRS scale was MIN-117 against placebo was observed as early as two weeks after administration of treatment. Furthermore 24% of patients treated with 2.5 milligram of MIN-117 achieved remission as prospectively defined. Interestingly both doses of MIN-117 also are observed to improve anxiety symptoms as measured by the Hamilton Anxiety Scale, AMA with effect sizes of 0.429 for 0.5 milligram and 0.45 of 2.5 milligram doses. Both doses demonstrated a favorable tolerability profile, and the incidence and types of side effects did not differ significantly between MIN-117 group and the placebo group. No unexpected adverse events were reported. Treatment with MIN-117 was not associated with cognitive impairment, sexual dysfunction, suicidal ideation or weight gain. Pharmacodynamic measurements based on sleep recordings show that MIN-117 preserved sleep continuity and architecture and therefore is not expected to have detrimental effects on rapid eye movement REM sleep distribution and duration unlike many marketed antidepressants. We believe this result show a meaningful clinical benefit and support Phase 2b development of MIN-117 as a product candidate with a differentiated mechanism of action and a favorable tolerability profile. Our third clinical stage product is MIN-202 a selective orexin 2 receptor antagonist and the development with the Janssen Pharmaceutica NV. Earlier this year we announced positive results from a Phase 2a clinical trial in insomnia disorder not associated with psychotic disorder and from a Phase 1b trial in MDD. Patients treated with MIN-202 into Phase 2a trial were observed to have statistically significant improvements in key sleep parameters, compared to patients treated with placebo. These included sleep efficiency as measured by objective polysomnography, the primary endpoint of the trial. In the Phase 1b trial in MDD treatment with MIN-202 was observed to result in consistent improvements in the symptoms of depression in MDD patients. These improvements support the potential of MIN-202 to have a direct effect on mood independent from its effect on sleep. The results from this trial, paves the way to initiate additional clinical testing in both indications. Along with Janssen we are planning the next steps in the clinical development program for MIN-202 including potential Phase 2b clinical trials in both insomnia disorder and MDD. Our preclinical product candidate is MIN-301 and the development as the treatment for Parkinson's disease. Building upon data from a non-human primate study with an analog of MIN-3-1 Minerva is continuing to conduct preclinical development and manufacturing scale-up activities with MIN-301 as a treatment for Parkinson’s disease. We expect that the next steps in the MIN-301 program, after completion of regular toxicology studies and final production of the GMP batch will include the filing an Investigational New Drug application, IND and/or an Investigational Medicinal Product Dossier, IMPD, with a Phase 1 study to commence upon acceptance by the U.S. Food and Drug Administration, FDA. In summary thus far in 2016, we have announced positive results from four clinical trials with MIN-101, MIN-117 and MIN-202. This data had been transformational for Minerva, as they provide the strong foundation for proceeding into more advance stages of clinical development with all three products. So protocols and designs for future clinical trials with MIN-101 and MIN-117 will take shape following our interactions with Regulatory Authorities. We are working to develop the growth potential of all our compounds in multiple indications and we look forward to the next round of clinical trials. I would now like to turn the call over to Geoff to cover our financial results.

[Geoff Race:]

Thank you, Remy. We issued a press release earlier this morning summarizing our operating results for the second quarter ended June 30, 2016.A more detailed discussion of our results may be found in our Quarterly Report on Form 10-Q filed earlier today. At June 30, 2016 the company's cash, cash equivalence and marketable securities were approximately $97.1 million compared to $32.2 million as of December 31, 2015.In January, February and June 2016 certain investors in the company's March 2015 Private Placement, exercise their warrants at an exercised price of $5.772 per share and received an aggregate of 3,850,051 shares of the company's common stock. The company received gross proceeds of approximately $22.2 million from the exercise of these warrants. In June, we completed an underwritten public offering of approximately 6.1 million shares of common stock at a price of $9.50 per share.Net proceeds to Minerva were approximately $53.7 million. Research and development expenses were $2.7 million in the second quarter of 2016 compared to $4.5 million in the second quarter of 2015. For the six months ended June 30, 2016, R&D expenses were $8.1 million compared to $8.4 million for the six months ended June 30, 2015. R&D expense in the three months ended June 30, 2016 and 2015 included non-cash stock-based compensation expenses of $0.2 million in both periods. Excluding stock-based compensation total R&D expense related to drug development programs for the three months ended June 30, 2016 and 2015 was $2.5 million and $4.3 million respectively, a decrease of $1.8 million. This decrease in R&D expense primarily reflects lower development expenses on MIN-202 as we fulfilled our funding obligation under the co-development agreement for the current development phase. The completion of the 12-week double-blind core phase of our Phase 2b clinical trial of MIN-101 and completion of our Phase 2a clinical trial of MIN-117,these amounts were partially offset by increased personnel costs. R&D expense in the six months ended June 30, 2016 and 2015 included non-cash stock-based compensation expenses of $0.5 million and $0.2 million respectively. Excluding stock-based compensation, total R&D expense related to drug development programs for the six months ended June 30, 2016 and 2015 was $7.6 million and $8.2 million respectively, a decrease of $0.6 million. This decrease in research and development expense primarily reflects lower development expenses on MIN-202 as we fulfilled our funding obligation under the co-development agreement for the current development phase. These amounts were partially offset by increased expenses related to our Phase 2a clinical trial of MIN-117,our Phase 2b clinical trial of MIN-101 and increased personnel costs. General and administrative expenses were $2.3 million in the second quarter of 2016 compared to $1.8 million in the second quarter of 2015.For the six months ended June 30, 2016, G&A expenses were $4.6 million compared to $3.8 million for the same period in 2015. G&A expense in the three months ended June 30, 2016 and 2015 included non-cash stock-based compensation expenses of $0.6 million and $0.4 million respectively. Excluding stock-based compensation, G&A expense for the three months ended June 30, 2016 and 2015 was $1.7 million and $1.4 million respectively. G&A expense in the six months ended June 30, 2016 and 2015 included non-cash stock-based compensation expenses of $1.2 million and $0.6 million respectively. Excluding stock-based compensation, G&A expense for the six months ended June 30, 2016 and 2015 was $3.4 million and $3.2 million respectively. The increase in G&A expenses for the three and six months ended June 30, 2016 were primarily due to an increase in personnel costs and professional fees. Net loss was $5.2 million for the second quarter of 2016 or a loss per share of $0.18 basic and diluted as compared to a net loss of $6.6 million or a loss per share of $0.27 basic and diluted for the second quarter of 2015.Net loss was $13.2 million for the first six months of 2016 or a loss per share of $0.47 basic and diluted as compared to a net loss of $12.7 million or a loss per share of $0.58 basic and diluted for the first six months of 2015. The proceeds generated from the recent financing and warrant exercise strengthened our financial position substantially. As a result, we expect that our cash, cash equivalents and marketable securities will be sufficient to fund Minerva's operations into 2018. Now I'd like to turn the call over to the operator for any questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Jason Butler with JMP Securities. Your line is open.

[Jason Butler:]

Hi, thanks for taking the questions. I'm just wondering Remy obviously you said that you still need to wait for feedback from Regulatory Authorities but any thoughts you can give us on the design of the next study or studies from MIN-101 at this point?

[Remy Luthringer:]

Thank you, Jason. This is obviously a very interesting question. So I think what you’re contemplating currently is to try to see all the options because having in mind the really exciting results we have here. You have several options but the preferred option for the moment which has to be worked out which has to be discussed obviously with KOLs and Physio Authorities is to move forward with the same type of patients as of one's have been – who have been included -- sorry – in this Phase 2b study because really it is an unmet medical need. It’s a population who is not really deserved by existing therapies. And so it makes a lot of sense to counter disease population among other options because keeping in mind that our molecule is not only improving negative symptoms but has also an impact on other dimensions of the disease. You have several options open. We are working very hard on this and we will have much more clarity in the closed future.

[Jason Butler:]

Okay, great. And then just on MIN-202 just thinking about the path in MDD, when you think about the potential sedation effects, how you design a trial, is this something where you would expect dose in the evening or how do you anticipate managing the sedation effects of the drug in MDD – and not on insomnia population?

[Remy Luthringer:]

Yeah, this is also a like always a great question. So definitely the drug has to be given in the evening because keep in mind that I mean even so we have seen a direct effect on mood, one of the key features of the key symptoms, coma bit symptoms in depression is definitely insomnia. So clearly you would like to cover both and then it makes a lot of sense to give the drug in the evening. This said, when you are speaking about sedation I think this is not completely correct because keep in mind that if you're going the Orexin pathway and you're going to block some Orexin pathways, you are not activating the sedating pathways into brain. Like GABA pathway but you're really controlling the over activity in terms of vigilance control in the brain. So what the molecule like our molecule is doing, it is somehow bringing back to physiological levels the over activity of the wake systems into brain. So betterment again long story short, the drug has to be given in evening for sure.

[Jason Butler:]

Great, helpful. And then just a quick question for Geoff, I’m thinking about the fact that you’re now in a position where you’re preparing for additional clinical studies, is the R&D run rate we saw in 2Q reflective of what we’re going to see for the rest of the year or could the trend change meaningfully from that?

[Geoff Race:]

We don’t really give guidance on expense Jason. Thanks for the question. But I think you're right, what we saw in quarter two was tapering effect as the 101 2b study and 117 2a study began to read out and my current thoughts for the remainder of the year is that the run rate won’t significantly change. Obviously, we are beginning to prepare for later stage studies and there will be additional costs associated with CMC and regulatory work. But my current thought is not significantly.

[Jason Butler:]

Okay, helpful. Thanks for taking the questions and congrats on all the progress and results from the last quarter.

[Remy Luthringer:]

Thank you.

[Operator:]

[Operator Instructions] I'm currently showing no further questions. I will now turn the call back over to William Boni for closing remarks.

[William Boni:]

Thank you everybody for joining us on this morning's call and we look forward to keeping you up-to-date as developments unfold in the coming months. Take care.

[Operator:]

Thank you, ladies and gentlemen. That does conclude today’s conference. You may all disconnect. And everyone have a great day.