Minerva Neurosciences Inc (NERV) 2016 Q2 法說會逐字稿

Welcome to 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 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.

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 US 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.

Thank you, Bill, and good morning, everyone. Thank you for joining us today. I am very pleased to report positive clinical data from two trials with MIN-101 in schizophrenia and MIN-117 in major depressive disorder were the highlights of the second quarter of 2016 for Minerva. The Company is preparing to move forward in the next stage of clinical development with these products. This data significantly strengthens the profiles of both compounds and underscores our 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 has had positive data readouts with three molecules -- MIN-101, MIN-117 and MIN-202 for four different trials. The 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 a 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 IIb study carried out in patients suffering from schizophrenia. A total of 244 patients were enrolled in a randomized placebo-controlled, double-blind, (inaudible) design perspective Phase IIb clinical trial. The core study, which was a double-blind treatment period of the trial, was carried out over 12 weeks. The primary objective was improvement in negative symptoms in patients treated with two doses of MIN-101, 32 at 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 (inaudible) in our model over 12 weeks of treatment, 12 weeks being the primary endpoint. No approved treatment is currently available for negative symptoms, which affect most schizophrenic patients, can persist over their life spans and ultimately define both the course of the disease and patient's ability to enjoy a productive social life.

The 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.

The benefit of treatment with both doses of MIN-101 of a placebo was also measured on the PANSS three factor negative symptom scale. The negative score measured from the seven negative score questions of the 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 0.7. The improvements in negative symptoms were concomitant with improvements in most of the secondary and exploratory endpoints like CGI-I and S, clinically global impression of improvement and severity respectively, BACS, brief assessment of cognition in schizophrenia and PSP, personal and social performance.

Positive symptoms were observed to remain stable until the 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, extrapyramidal symptoms, and no sedations were observed. Two patients out of 162 who received MIN-101 were discontinued based on QTcF prolongation both in the higher dose.

In summary, due to the fact 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, the data from this trial indicates a direct effect on negative symptoms resulting from treatment with MIN-101 rather than an undirect 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 review forms 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 are 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 IIb trial represent a seminal 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 readout that occurred during the second quarter was for Phase IIa randomized double-blind pilot group placebo and active controlled 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. The 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 dependence 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 with 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, HAM-A, with effect sizes of 0.49 for 0.5 milligram and 0.45 for 2.5 milligram doses. Both doses demonstrated a favorable tolerability profile and the incidents and types of side effects did not differ significantly between the 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 showed 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 these results show a meaningful clinical benefit and support Phase IIb 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 Janssen Pharmaceuticals NV. Earlier this year, we announced positive results from a Phase IIa clinical trial in insomnia disorder not associated with (inaudible) disorder and from a Phase Ib trial in MDD. Patients treated with MIN-202 in the Phase IIa trial were observed to have statistically significant improvements in several key sleep parameters compared to patients treated with placebo. This included sleep efficiency as measured by objective polysomnography, the primary endpoint of the trial.

In the Phase Ib trial in MDD, treatment with MIN-202 was observed to result in consistent improvements in the symptoms of depression in MDD patients. This improvement supports the potential of MIN-202 to have a direct effect on mood independent from its affect on sleep. The results from this trial paved 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 IIb clinical trials in both insomnia disorder and MDD.

Our preclinical product candidate is MIN-301 and the development as a treatment for Parkinson's disease. Building upon data from a nonhuman primate study with an analog of MIN-301, 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 of 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 US Food & 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 has been transformational for Minerva. It provides a strong foundation for proceeding into more advanced stages of clinical development with all three products. The 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 broad 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.

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 equivalents 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 exercised their warrants at an exercise 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 IIb clinical trial of MIN-101 and completion of our Phase IIa 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 at $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 of $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 IIa clinical trial of MIN-117, our Phase IIb 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 Instructions). Jason Butler, JMP Securities.

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?

Thank you, Jason. This is, obviously, a very interesting question. So I think what we are contemplating currently is to try to see all of the options because having in mind the really exciting results we have here. We 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 with the authorities is to move forward with the same type of patients as the ones who have been included in this Phase IIb study because really it is an unmet medical need. It is a population who is not readily served by existing therapies and so it makes a lot of sense to consider this 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. We have several options open. We are working very hard on this and we will have much more clarity in the close future.

Okay, great. And then just on MIN-202, just thinking about the path in MDD. When you think about the potential sedation effects, how do 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 a non-insomnia population?

Yes, this is also like always a great question. So the drug has to be given in the evening because keep in mind that even so we have seen a direct effect on mood, one of the key features or the key symptoms, comorbid symptoms in depression is definitely insomnia. So clearly, you would like to cover both and it makes a lot of sense to give the drug in the evening.

When you speak about sedation, I think this is not completely correct because keep in mind that if you are going via the orexin pathway and you are going to block some orexin pathways, you are not activating the sedating pathways in the brain like the (inaudible) pathway, but you are really controlling the overactivity in terms of vigilance control in the brain. So with a molecule like our molecule is doing, it is somehow bringing back to a physiological level the overactivity of the weight systems in the brain. So (inaudible) again, a long story short, the drug has to be given in the evening for sure.

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

We don't really give guidance on expense, Jason. Thanks for the question. But I think you are right. What we saw in quarter two was a tapering effect that the 101 IIb study and the 117 IIa 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.

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

(Operator Instructions). I am currently showing no further questions. I will now turn the call back over to William Boni for closing remarks.

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.

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