Minerva Neurosciences, Inc.
Q3 2014 Earnings Call Transcript

Published: 7 Nov 2014

[Operator:]

Welcome to Minerva Neurosciences Third Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode and there will be a question-and-answer session at the end. This call is being webcast live on the Investors section of Minerva’s website at minervaneurosciences.com. As a reminder, today’s call is being recorded. I would now like to turn the call over to Joe Reilly, Chief Operating Officer at Minerva. Please proceed.

[Joe Reilly:]

Good afternoon. A press release with the company’s third quarter 2014 financial results became available at 4 p.m. Eastern Time today and can be found on the Investors section of our website. Joining me on the call today are, Dr. Rogerio Vivaldi, Chief Executive Officer of Minerva; Dr. Remy Luthringer, President and Chief Scientific Officer; and Mr. Geoff Race, Executive Vice President and Chief Financial Officer. Following our prepared remarks we will open the call for Q&A. Before we begin, I’d 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. Among the factors that could cause actual results to differ materially include the initiation timing, cost, progress and success of our research and development, preclinical studies and clinical trials, developments related to our competitors and our industry, including the success of competing therapies that are or may become available, our ability to advance product candidates into and successfully complete clinical trials and other factors identified from time to time in reports filed with the Securities and Exchange Commission. Any forward-looking statements made on this call speak only as of today's date, Thursday, November 6, 2014, and the company does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today's date. I would now like to turn the call over to Rogerio Vivaldi.

[Dr. Rogerio Vivaldi:]

Thank you, Joe. Good afternoon, everyone. Today I will outline our recent pipeline progress and how these advancements reflect our dedication to the treatment of neuropsychiatric diseases and the patients in this field [indiscernible] that needs. Let’s start with the Q3 highlights, Dr. Remy Luthringer will review the specific clinical developments that are currently underway later in his prepared remarks. But I would like to quickly highlight our achievements, where I am very excited by the progress we have made in the multiple upcoming milestones we are anticipating across our pipeline. During the third quarter, we advanced our two main clinical programs, MIN-101, which we are preparing for Phase 2b trials for schizophrenia and MIN-202 for insomnia, which is a multiple Phase 1 studies. Let start with MIN-101. We continue to advance MIN-101, our lead pipeline asset and initiate the new Phase 1 once daily dose formulation of the compound that is being conducted in two parts. The objective of the first part is to assess different prototypes of the drug and their plasma PK data after a single dose. We expect to release topline results from this part of the study in the near-term with an announcement planned for the fourth quarter of 2014. The second part of this trial will be to evaluate the selective prototype for dose and time-related effects which will then be used in the Phase 2b study being planned in Europe, which we’ll expect to begin rolling in the first half of 2015. On MIN-202, we have also made important progress with our insomnia program including the hidden FDA acceptance for our IND application for MIN-202 and our collaboration partner Janssen has now initiated a Phase 1 bioavailability study in healthy volunteers in the U.S. We expect to announce topline results from these trial in fourth quarter of 2014. There are two other ongoing MIN-202 Phase 1 studies, a multiple ascending dose study in healthy volunteers and a Phase 1b study in patients with major depressive disorder also suffering from insomnia symptoms. And we expect to announce topline results from both studies in first quarter of 2015. I will also like to announce that as of November 5, 2014, Remy Luthringer has been promoted to President and Chief Scientific Officer. As most of you know, Remy has served as the Executive Vice President and Head of R&D at Minerva since the inception of the company. In his new role, he will be responsible for the evaluation, design and implementation of the strategy towards advanced companies pipeline and R&D problems. In his career, Remy has been involved in the development of more than 150 active molecules advanced to clinical stage research in the treatment of central nervous systems diseases and disorders. And his expansive experience in both research and clinical psychiatric practice will be an even more important asset to our company in his new role. I congratulate him for a well-deserved promotion. With that, I would like to turn the call over to Remy to review the updates to our clinical problems in further detail.

[Dr. Remy Luthringer:]

Thank you, Rogerio. Turning first to MIN-101, MIN-101 is an innovative small molecule. It acts as an antagonist of 5-HT2A and sigma2 receptors. And in Phase 2a study has shown efficacy on the spectrum of symptoms for schizophrenia, particularly the negative symptoms, cognitive impairments and sleep disorders of the disease, which are underserved by current treatment options and constitutes the main unmet medical needs. MIN-101 also has a potential to avoid the similar side effects of existing therapies, including sedation, [indiscernible] symptoms, plasma prolactin increase, metabolic disorders and weight gain. We plan to initially develop MIN-101, as a first line monotherapy therapy. In our Phase III trials, we’d also study its use in co-administration with atypical antipsychotics. We believe there is also an opportunity to use MIN-101 in other neuropsychiatric diseases outside of schizophrenia, like severe mode of neurodegenerative disorders. We are currently conducting a Phase 1 trial of MIN-101 to come up with once-a-day formulation and to assess those dose dependency and time dependency features of our drug. The study is being carried out in healthy volunteers and the main objective is to establish the final optimal once-a-day formulation, which will be used in our Phase 2b trial in patients suffering from schizophrenia. As Rogerio mentioned, this trial is being conducted in two parts. Part one is exploring the plasma levels of several prototypes of the drug after a single-dose. The primary aim is to evaluate the plasma pharmacokinetic profile of the compound, is a similar aggregate exposure leveler to that observed in the Phase 2a study and it’s a drug that was administered twice a day. Safety, tolerability and the pharmacokinetic profile in a fed and fasted state are also being assessed as well. Results are expected to be available in the fourth quarter of 2014. The data will be used to select the formulation, which will be used in our Phase 2b study currently which is in preparation. Our two utilizings once a day formulation validated in path one will be administered over seven days at two dose levels to determine CNS pharmacodynamic effects and the plasma pharmacokinetic profile of MIN-101. The main CNS objective pharmacodynamic measurements of sleep parameters which quite improved during the Phase 2a study. Safety, tolerability and vital signs will also be assessed. Our two clinical activities will start in the fourth quarter of 2014, and results are expected to be available in the first quarter of 2015. Phase 2b, the results of our once-daily formulation in hand, we plan to submit a multi-center, randomized placebo-controlled, double-blind, parallel group design in Europe in the fourth quarter of 2014. The study will explore the effect of two doses of MIN-101, 32 milligram and 64 milligram in 234 schizophrenic patients with confirmed negative symptoms. Patients will receive treatment once daily for three months, followed by an extension of six months. The primary endpoint for efficacy of this trial will be to evaluate the differences from placebo of negative symptoms after the three months treatment period, as measured by the change from baseline PANSS positive and negative syndrome scale. We plan to also investigate the effects on positive symptoms and overall symptoms of schizophrenic measured by PANSS and the Clinical Global Impressions rating scales. Cognitive functions and the improvement in function will be explored as well as secondary measures. Clinical and biological safety and pharmacokinetics will also be part of the study. Subject to receiving the necessary regulatory and ethical approvals in Europe, enrollment is expected to begin in the first half of 2015, with topline results expected in the first half of 2016. Minerva holds an exclusive license of MIN-101, excluding most of Asia. Now MIN-202 program. Moving onto our second product candidate, MIN-202, is an innovative selective orexin-2 receptor antagonist under development in collaboration with Janssen for the treatment of primary and secondary insomnia. We believe MIN-202 is one of the most advanced molecule with the mechanism of action to treat insomnia, aiming to have inhibiting activity of the neurons that promote wakefulness. Phase 1 trials. In September, Janssen initiated a Phase 1 bioavailability study in the U.S. following the FDA acceptance in our IND application. This is a randomized, open-label, three-way crossover study to evaluate the bioavailability, food effect, and safety and tolerability of a solid dosage formulation of MIN-202 in healthy male subjects. Topline results from this trial are expected in the fourth quarter of 2014. The Phase 1b study in also ongoing in MDD patients suffering from secondary insomnia. The results of this study are expected to be available in the first quarter of 2015. Finally, a Phase 1 multiple ascending dose study in healthy volunteers is also expected to produce topline data in the first quarter of 2015. This study is designed to evaluate the safety and tolerability of the drug as well as plasma decay characteristics. Stress hormone levels will also be explored. Minerva has a co-development agreement with Janssen Pharmaceutica, a J&J company and holds commercialization rights for this molecule in Europe. Rest of the pipeline. In addition to our main compound MIN-101 and our collaboration with Janssen on MIN-202, we continue to assess the most capital efficient development strategy, including the potential for collaborations, for the other product candidates in our pipeline, including MIN-117 for major depressive disorders and MIN-301 for Parkinson’s disease. I will now turn the call over to Geoff to cover the financial results for the third quarter.

[Geoff Race:]

Thank you, Remy. Earlier this afternoon, we issued a press release summarizing our results of operations for the third quarter of 2014. A more detailed discussion of our results may be found in our quarterly report on Form 10-Q filed earlier today. Now moving to our cash position. Cash and cash equivalents as of September 30, 2014 were $23.6 million, compared to $1.8 million as of December 31, 2013. In July 2014, the sale of approximately 5.6 million shares in an IPO, including the partial exercise of the underwriters’ option to purchase additional shares, and approximately 0.7 million shares in a private placement resulted in net proceeds to the company of approximately $29.9 million, after deducting underwriter discounts, offering costs, loan repayments and a $0.7 million license fee payment to ProteoSys. The company also sold approximately 3.3 million shares in July 2014 in a third private placement with Janssen, resulting in gross proceeds of $19.7 million. In conjunction with this private placement, the company made a $22 million license fee payment to Janssen. Minerva expects that the proceeds from the IPO and private placements will be sufficient to fund its operating requirements through the end of 2015. R&D expenses. Research and development expenses were $24.7 million in the third quarter of 2014, compared to $0.2 million in the same period in 2013. Included in research and development expense for the three months ended September 30, 2014 was $22 million associated with the license fee payment made to Janssen pursuant to our co-development agreement for MIN-202 and non-cash stock-based compensation expense of $0.1 million. Excluding non-cash stock-based compensation expense and the $22 million license fee, research and development expenses for the third quarter were $2.6 million, versus $0.2 million in the same period last year. This increase was primarily due to $1 million related to once a day formulation study initiated in 2014 for MIN-101 and $1.4 million in development costs for MIN-202 under our co-development agreement. G&A expenses. General and administrative expenses were $2.4 million in the third quarter of 2014, compared to $0.3 million in the same period in 2013. Excluding non-cash stock-based compensation expense of $0.8 million, general and administrative expenses were $1.6 million in the third quarter of 2014, versus $0.3 million in the same period in 2013. The increase was primarily due to $0.3 million related to intellectual property matters and our operations as a public reporting company and $1 million related to staffing, office leases and information systems to support our operations. The net loss was $27.2 million for the third quarter of 2014, or a loss per share of $1.53 basic and diluted, as opposed to a net loss of $0.5 million, or a loss per share of $0.12 basic and diluted for the same period in 2013. And now, I’d like to turn the call over to the Operator for any Q&A.

[Operator:]

Thank you. [Operator Instructions] Our first question today comes from the line of Jason Butler of JMP Securities. Your line is open. Please go ahead.

[Jason Butler:]

Hi. Thank you for taking the questions and congratulations on the progress. First question on MIN-202 and actually let me just start by congratulating Remy also on his promotion. Congrats, Remy. On MIN-202, can you just give us some more color on what you are looking for out of this array of Phase 1 studies? And what in your mind are go-no-go hurdles that need to be crossed to move into a further advance development?

[Dr. Remy Luthringer:]

Jason, thank you for your congratulation. So, MIN-202, I mean these three studies, I mean as you heard, one study is exploring insomnia in patient suffering from major depressive disorders and here we are doing polysomnography. So an objective measure of sleep. So here definitely, this objective is very clear, is to really show that the drug is improving, sleep induction and sleep maintenance. So this is really to cover the effect of insomnia. The second study, which is a multiple ascending dose study, is really to see what are the PK characteristics of the drug. And as you know, when you are developing a drug for insomnia, you need to have a very specific PK behavior, which is really fitting very well with a PK/PD effect expecting, which is in other words quick sleep induction. An effect which is maintained over a few hours and afterwards when you wake up, you are completely refreshed, so the drug should no longer be on board. So this is a second objective and because often this drug is given after repeated administrational several times, you need really to cover this. So if this is ready to cover this aspect and there is a study in the U.S., which has been completed in the U.S., is really to move from the liquid formulation, which has been used in the previous trials, was a solid formulation, which is a formulation which would be used in Phase 2a studies. So it's really to get a good understanding of the PK of this drug, to get a good understanding about the PK/PD and to get first hints of efficacy using an objective measurement, which is polysomnography.

[Jason Butler:]

Okay great that's helpful. And then just a question for Geoff on the numbers I guess, two different is about some question. One can you help us think about from the current base R&D spend excluding the payment to Yens and how we should think about that trend going forward? And then the second question I am thinking about the current cash and putting into contest what you think they get you in terms of runway both in terms of time and clinical catalysts?

[Geoff Race:]

Thanks for the question Jason. I’ll take the second one first the runway hasn’t changed from our original indication earlier this year and the current cash balances will take you through the end of 2015. That will take us most of the way through the Phase 2b study on 101. And it also obviously completes the first part of the 202 studies. With regard to your second question, obviously, there has been a lot of extraordinary expenditure in quarter two and quarter three related to the IPO. In quarter four, we expect R&D expenditure to increase from that level reported in quarter three, the $2.6 million reported in quarter three. I would expect that quarter four R&D expenditure would be in the region of between $4 million and $5 million.

[Jason Butler:]

Great. Thanks for the added color and again, congratulations on the progress.

[Joe Reilly:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Brian Skorney of Robert W. Baird. Your line is open. Please go ahead.

[Brian Skorney:]

Hey, guys, afternoon. Thanks for taking the call. Operator, thanks for taking the question. I guess, my whole question is really when do you think we might walk towards a U.S IND filing for MIN-101? Any thoughts about including some U.S. sites in phase 2b? I just know, historically, we've seen some ex-U.S. studies in phase 2b look good and then once U.S. patient were included in Phase 3. We’ve seen some failures. So I just wonder you can maybe just characterize thoughts about moving clinically into the U.S.? And how the phase 2b study might be derisked in terms of moving to Phase 3 from that perspective?

[Dr. Rogerio Vivaldi:]

Let me answer this.

[Joe Reilly:]

Yeah. Go ahead.

[Dr. Rogerio Vivaldi:]

Yeah. So Brian, great question obviously. So as you can guess we are working very intensively on preparing the file to go to the FDA. We are really compiling all the data and also as a new data coming in are very important for this file. We have completely designed Phase 2b study. As you heard, I mean, it’s a once a day formulation is also under control. So I think it is the right time to grow, so we are really working on this. And as soon as we will be ready, which will be almost in next few weeks, we will seek for our first time meeting with the FDA. So this will be our first meeting to get advice but I admit we’re working very hard on this to get it as quickly as possible. So this is the objective in terms of opening an IND. The objective is to get the feedback from the FDA in terms of study design and to really get them also understanding what you are doing currently in Europe in order to have the possibility as soon as we have the IND to do some patients in the U.S. if coming to this stage. But that mean, we are really working hard on this and it should be a matter of some weeks to have the first meeting.

[Brian Skorney:]

Great. Thanks, guys.

[Operator:]

Thank you. [Operator Instructions] And I’m showing no further questions. I’d like to turn the conference back over to management for any closing remarks.

[Joe Reilly:]

Thank you. Thank you all for your participation in today's call. And of course, we are very excited with the upcoming milestones that we just announced to you in the following months. And we look forward to updating you again very soon. Thank you all.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect.