Minerva Neurosciences Inc (NERV) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Minerva Neurosciences second-quarter 2014 conference call.

(Operator Instructions).

I would now like to turn the conference over to your host for today Mr. Joe Reilly, Chief Operating Officer. Sir, you may begin.

Good afternoon. A press release with the Company's second-quarter 2014 financial results became available at 4 PM Eastern time today and can be found on the investors section of our website.

Joining me on the call today is Dr. Rogerio Vivaldi, President and Chief Executive Officer of Minerva; Dr. Remy Luthringer, Executive Vice President and Head of Research and Development; 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 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 the purposes of the Safe Harbor provision 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 relating 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, August 7, 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.

Thank you, Joe, and good afternoon everyone. On behalf of everyone at Minerva Neurosciences I am very pleased to welcome you to our first public conference call as a NASDAQ listed Company following our initial public offering last month.

As this is our first call I would like to begin by providing a brief overview of our Company and the significant progress that we have made so far this year. This has been a remarkable quarter as well as a critical year for Minerva Neurosciences.

Minerva became a public company through a successful IPO in July raising net proceeds of $29.9 million. In conjunction with the IPO we completed a co-development and license agreement for our insomnia compound, MIN-202, with Janssen Pharmaceutica, a Johnson & Johnson company. And we have made important progress with our two main clinical programs, MIN-101, which is in Phase 2 trials for schizophrenia and MIN-202, for insomnia which is in Phase 1B.

To take a step back for a moment, Minerva Neurosciences is a clinical stage biopharmaceutical company focused on the development and commercialization of a portfolio of product candidates to treat neuropsychiatric diseases. Neuropsychiatric is a medical subspecialty devoted to understanding cognitive, emotional behavior and perceptual symptoms resulting from circuit-specific brain dysfunction and includes a range of serious diseases and conditions.

Based on our deep knowledge of the pathophysiology of these diseases, the pharmacology of our library of compounds and our understanding of desired outcomes for an unmet patient need we are developing a portfolio of first-in-class proprietary compounds with novel mechanisms of action which act to both validate and innovate the pathways for the treatment of neuropsychiatric disorders. Our goal with the support of a team of world-renowned experts in this space is to transform the lives of patients and their families with differentiated treatments that may represent a significant improvement to the standard of care in neuropsychiatry.

Let's review MIN-101 products. Schizophrenia is a chronic and severe mental disorder characterized by several types of symptoms, positive and negative symptoms, cognitive impairment and sleep disorders. Most currently approved therapies for schizophrenia show efficacy primarily in the management of what are known as positive symptoms. As a result, patients with predominantly negative symptoms representing more than 40% of the overall population are severely underserved.

It is worthwhile to know that all patients suffering from schizophrenia present with negative symptoms even if the symptoms are not the most predominant ones. Negative symptoms are truly a debilitating problem for these patients and we believe there is an urgent need to provide better treatment options for them.

MIN-101, our lead frontline asset, is an innovative small molecule that acts as an antagonist of 5-H2A and sigma-2 Receptors and has increased two studies for the treatment of schizophrenia including the negative symptoms of the disease. In addition, side effects of current therapy options include sedation, uncontrollable movements, extrapyramidal syndrome, weight gain, prolactin increased and metabolic syndrome. These unfavorable side effects profile besides the substantial limitations in the effectiveness of the current available drugs contributes to their discontinuation rates of 60% to 80% over the course of 18 months.

We believe that MIN-101 has a number of potential advantages over currently available therapies. Number one, address the whole spectrum of systems. MIN-101 has been shown to modulate dopamine, which is associated with improving positive symptoms, improving negative symptoms, positively impacting certain cognitive skills such as motor speed, motivation, verbal fluency and memory and reducing sleep disorders.

Number two, avoid many of the typical side effects associated with existing therapies. Unlike currently available therapies that block the effect of dopamine, MIN-101's mechanism of action moderates the effect of dopamine, which may help prevent and avoid side effects such as involuntary movements, prolactin increased sedation, weight gain and metabolic syndrome, which are seen with existing therapies.

Number three, good safety and tolerability profile. Based on the results of our Phase 1 and Phase 2a studies we believe that MIN-101 demonstrated safety and tolerability profile comparable to placebo.

Number four, single and combination treatment options. We plan to initially developed MIN-101 as a first-line monotherapy. If approved, we believe MIN-101 will be a first-in-class compound for the treatment of schizophrenia including the negative symptoms of the disease.

Let's review the Phase 2a results. We completed a Phase 2a clinical trial of MIN-101 in 96 patient suffering from schizophrenia. Enrolled patients experienced positive, negative and cognitive symptoms of the disease and ceased to respond well to previously prescribed medications and suffered from an acute episode necessitating a hospitalization.

The study was designed as a double-blind placebo-controlled study with a treatment duration of three months. The primary endpoint of the study was to evaluate the efficacy of MIN-101 versus placebo as measured by the positive and negative symptoms scale or PANSS. Secondary and exploratory endpoints included cognition, mood, anxiety and sleep.

Overall, patients treated with MIN-101 showed ongoing improvements in negative symptoms as compared to placebo throughout the duration of the trial. These facts became statistically and clinically significant after three months of treatment. After three months of treatment improvements of all of the dimensions of the PANSS scales could be described as well as improvement of some cognitive functions and sleep.

Once-a-day formulation in adjunctive studies, we are now conducting a trial in healthy subjects to develop a final once-a-day formulation for MIN-101 and expect to release the top-level results of this study by the end of the second half of 2014. Our plan for Phase 2b, the Company will conduct a multi-centered randomized double-blind broader outlook placebo-controlled trial that will be submitted to IRBs on a country-by-country basis in several European countries.

The study will explore the effect of two doses of MIN-101 in about 250 stable schizophrenic patients with predominately negative symptoms. The primary endpoint for efficacy of this trial will be to evaluate the difference from placebo of negative symptoms after three months of drug administration.

We plan to also investigate the effects on sleep, cognition, on sight and mood as well as clinical and biological safety and pharmacokinetics, subject to receive the necessary regulatory and ethical approvals in Europe will begin enrollment in the trial in the first quarter of 2015. We expect to have the readout of the results of this study in the first half of 2016. Minerva holds the exclusive license for this molecule and developed and marketed products related to MIN-101 compound globally excluding most of Asia.

Let's review now MIN-202 product. Our second product candidate, MIN-202, is an innovative selective orexin 2 receptor antagonist under development in collaboration with Janssen Pharmaceutica, a Johnson & Johnson company, for the treatment of primary and secondary insomnia. In the secondary indication we are currently evaluating MIN-202 as an adjunctive therapy with an antidepressant.

The major drawbacks of current insomnia indications are that immediate onset therapies taken at bedtime can interfere with natural sleep onset and some key sleep patterns. As a result patients can experience residual effects the following day such as daytime sedation, slowed or distorted reaction time and cognitive impairment. MIN-202 is among the most advanced molecules to treat insomnia and is specifically targeted towards inhibiting the activity of the neurons that promote wakefulness, an approach that is likely to result an improvement to available therapies.

Let's review Phase 1. Janssen conducted a single ascending dose trial of MIN-202 in 57 males. The objectives of the study were to investigate the safety, tolerability, pharmacokinetics and maximum tolerated dose of MIN-202. Safety and tolerability profile of the drug was good.

In terms of PK characteristics, the time to maximum concentration was reached in 30 minutes and some sedative effects of these drugs lasted from four to six hours. And the effects were demonstrated to be dose-dependent.

Our next steps, our development partner, Janssen, initiated a Phase 1B study in December 2013 in 20 patients with a major depressive disorder suffering from secondary insomnia. The results of this study are expected to be available at the end of the second half of 2014.

Following the review of these results we aim to continue developing both primary and secondary insomnia in 2015. Minerva holds the co-development agreement with Janssen Pharmaceutica and commercialization rights for this molecule in Europe.

Let's talk about the rest of the pipeline. In addition to our collaboration with Janssen, we plan to assess the most capital-efficient regulatory approval strategy including the potential for collaborations for the other product candidates in our pipeline including our candidate for major depressive order, MIN-117, and MIN-301 for Parkinson's disease.

Dr. Remy Luthringer can answer any questions about our programs during the Q&A session. And with that I will turn the call over to Geoff to go over the financial results for the second quarter.

Thank you, Rogerio. Earlier this afternoon we issued a press release summarizing our results of operations for the second quarter of 2014. A more detailed discussion of our results may be found in our quarterly report on Form 10-Q filed earlier today.

Moving to our cash position, in July we successfully completed an IPO of 5.6 million shares of common stock including a greenshoe over-allotment. Additionally we sold [0.6] million shares (sic - see Press Release, 0.7 million) in the private placement. The combined 6.3 million common shares sold resulted in net proceeds of approximately $29.9 million after deducting underwriter discounts of $2.6 million, deferred offering costs of $3.1 million, loan repayments of $1.4 million and a license fee payment of $0.7 million.

Concurrent with the IPO we sold approximately 3.3 million shares in July 2014 and a second private placement with Janssen yielding $19.7 million in gross proceeds. Following the IPO we paid a $23 million license fee to Janssen in respect of the MIN-202 program.

Cash and cash equivalents as of June 30, 2014, were $0.5 million compared to $1.8 million as of December 31, 2013. As of June 30, 2014, the Company had 8.5 million common shares and 3.1 million stock options outstanding. We expect our cash and cash equivalents including the proceeds from the IPO and private placement will be sufficient to fund operating requirements through the end of 2015.

R&D expenses. Research and development expenses were $14.6 million in the second quarter of 2014 compared to $0.3 million in the same period in 2013. Included in research and development expense for the three months ended June 30, 2014, is non-cash stock-based compensation expense of $13 million related to the vesting of certain stock awards and option grants.

Excluding non-cash stock compensation expenses research and development expenses for the second quarter were $1.6 million versus $0.3 million in the prior-year period. This increase was principally attributable to higher drug development program costs associated with a study initiated in 2014 to evaluate the pharmacokinetic profile of MIN-101, higher development cost in 2014 due to the addition of MIN-117 as a result of our merger with Sonkei in November, 2013, and additional development costs related to MIN-301 as a result of our acquisition of Mind-NRG in February 2014.

General and administrative expenses were $3.1 million in the second quarter of 2014 compared to $0.1 million in the same period in 2013. General and administrative expenses for the three months ended June 30, 2014, included $1.5 million in non-cash stock-based compensation expense related to certain stock option grants.

Excluding non-cash stock-based compensation expense, general and administrative expenses were $1.1 million for the three months ended June 30, 2014, versus $0.1 million in the prior year period. The increase in general and administrative expenses in 2014 was due primarily to higher legal and professional fees related to intellectual property matters and preparing for our operations as a public reporting company and higher costs related to staffing, office leases and information systems as we invest in the infrastructure necessary to support the Company's operations.

In addition, general and administrative expenses in quarter two included $0.5 million of bonuses payable to management in connection with the completion of the IPO. Overall, our net loss was $19.4 million for the second quarter of 2014, or a loss per share of $2.55 basic and diluted as compared to a net loss of $0.4 million, or loss of $0.10 per share basic and diluted for the same period in 2013.

Now I would like to turn the call over to the operator for any questions and answers.

(Operator Instructions). Jason Butler, JMP Securities.

Hi, thanks for taking the questions and congratulations on completing the IPO. Rogerio, maybe I could ask you just to expand a little bit on your comments on MIN-101. You talked about the drug's impact on negative symptoms.

How do you see, based on the data you have today, this drug eventually being positioned in the treatment orientarium? Are you looking at this just as a drug that can add to the effects of current antipsychotics that impact positive symptoms, or do you see this as a stand-alone therapy and how will that play out in terms of your views on the potential impact on positive symptoms?

Yes, thank you Jason for the question. It's an important one and I think that, one, we have to realize that there is an important need for patients there. Their main problem of these very debilitating diseases are the negative symptoms.

So we believe, and I will do an analogy here, that if we consider infection and fever, infection is the negative symptoms. Fever are the positive symptoms so we believe that by treating the infection we will be treating the fever later on.

So the goal is to have, and all of these statistics say, that half of patients have a predominantly disease of negative symptoms. But we know that almost all patients they experience negative symptoms throughout their disease and the negative symptoms increase over time while positive symptoms decrease with severity and frequency.

So again, there were patients that could be treated absolutely only with a drug that could effectively treat negative symptoms. And others that you may have to utilize some other therapies maybe for a short duration of therapy so that you can really compensate them on their positive symptoms but while you stay on the drug for the main problem of the disease that will take longer to be treatable. Remy Luthringer, do you want to add any additional comment on this?

Yes, so definitely, Jason, to answer your questions, when you are looking to the data we have generated in our Phase 2a study, we have definitely demonstrated a very important effect on negative symptoms. But we have also demonstrated an effect on the cognition on sleep, which is an important symptom of the disease, and we have also demonstrated that we are able to maintain positive symptoms in a range which are acceptable.

So definitely the strategy with this drug is a strategy to go in monotherapy and also to prepare the ground to be able to give the drug in other therapy in extremely acute phases where the patient is experiencing positive symptoms. But basically it is a monotherapy which we are aiming to go for for two reasons. First of all, to really give the full efficacy of the drug and second, we have a much better safety profile in terms of sedation, prolactin increase and the other symptoms known to exist in therapies.

That's really helpful, thanks. And then I just had a quick housekeeping question for Geoff. Geoff, could you just clarify for us what your pro forma cash position is following the completion of the IPO and the Janssen transaction?

Yes, we have net proceeds of $29.9 million from the IPO itself. We then received $19.7 million from Janssen in the concurrent pipe.

We then paid $22 million up front so there was a net $2.3 million outflow to Jansen. Therefore the pro forma cash position post-IPO was $27.6 million.

Okay. That's great. Thank you very much and congratulations again on completing the IPO.

Thank you. (Operator Instructions). Brian Skorney, Robert W. Baird.

Hi, how is it going guys? Thanks for taking my call. This is Morgan, filling in for Brian today.

I just had a quick question regarding the MIN-101. I dialed in a little late so a might have missed this, but can you let us know when we might see something about the new formulation going to once daily? Thanks.

Yes, we have released that. We expect to deliver the results of our once-a-day formulation before the end of the year.

These studies are ongoing right now. Remy, Do you want to add anything on that?

This is exactly right and definitely the timing you describe is exactly the timing.

Okay.

Okay, great. Thanks. And congrats.

Thank you. And I am showing no further questions in queue. I would like to turn the conference back over to Rogerio Vivaldi for any closing remarks.

Thank you. And thank you all for your participation in today's calls. We really look forward to updating you again soon as long as we have more and more exciting news.

We are here to change peoples' lives and we are committed to this. Thank you very much.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation.

You may now disconnect. Everyone have a great day.