Minerva Neurosciences Inc (NERV) 2017 Q4 法說會逐字稿

Welcome to the Minerva Neurosciences Year-End 2017 Conference Call. (Operator Instructions) 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.

Good morning. A press release with the company's year-end 2017 financial results became available at 7:30 a.m. Eastern time today and can be found on the Investor section of our website. Our annual report on Form 10-K was also filed electronically with the SEC this morning and can be found on the SEC's website at www.sec.gov.

Joining me on the call today from Minerva are Dr. Rémy Luthringer, Executive Chairman and Chief Executive Officer; Mr. Rick Russell, President; 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 that are more fully detailed under the caption Risk Factors in our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 12, 2018. Any forward-looking statements made on this call speak only as of today's date, Monday, March 12, 2018, 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 Rémy Luthringer.

Thank you, Bill, and good morning, everyone. Thanks for joining us today. We began 2018 with 4 clinical trials underway with 2 product candidates, and we are planning to begin a fifth trial with a third 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 a 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 define 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 a pivotal Phase III clinical trial of roluperidone as monotherapy for negative symptoms in patients diagnosed with schizophrenia. This multicenter, 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 adult patients. The 12-week study will be followed by a 40-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 endpoint, the change from baseline in negative symptoms using the Positive and Negative Syndrome Scale, PANSS, 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 read out topline 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 the treatment specifically directed towards negative symptoms for which no agent 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 MIN-202, 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 IIb clinical trials were initiated with seltorexant. Two of these trials are in MDD and one is in insomnia disorder. These trials built 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 topline data readouts from these trials in 2019.

In August 2017, an amendment to our agreement with Janssen for seltorexant became effective. Under the amended agreement, Minerva has assumed strategic control for the Phase III development of this compound in insomnia, but has no further financial obligations until the Phase IIb 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 onto MIN-117, we anticipate that our Phase IIb trial in MDD will begin shortly. We plan to recruit patients with MDD who also have symptoms of anxiety, thus building upon Phase IIa clinical results that showed effects in both depressive [symptomology] and anxiety. While existing therapies for MDD are available, their effectiveness is limited due to unacceptable side effects, particularly cognitive impairment and sexual dysfunction. Patients 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 warrant the exploration of new treatment strategies with molecules such as MIN-117 that possess 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 agent that can potentially address these shortcomings.

In addition to our clinical stage portfolio, we are developing preclinical 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 these studies will serve as a basis for regulatory filings in the U.S. or Europe that, if approved, would allow us to move this compound 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 3 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 in 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's 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.

Thank you, Rémy. 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 target 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'll 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 #1 unmet medical need for patients with schizophrenia, according to recent data monitoring survey information; #2 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 could fluctuate and tend to be more episodic, with acute episodes of psychosis or hallucinations, which decline 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 antipsychotics, 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 treatments based on its mechanism of action, clinical effect and, of course, the target 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'll turn it over to Geoff.

Thank you, Rick. Earlier this morning, we issued a press release summarizing our operating results for the fourth quarter and year ended December 31, 2017. A more detailed discussion of our results may be 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 may be 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 options 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 higher development expenses under the seltorexant program, increased expenses for the roluperidone program, an increase in personnel costs and an increase in noncash stock-based compensation expenses. These amounts were partially offset by lower costs due to the completion of the Phase IIa 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 noncash 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 loss 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 0 in the fourth quarter of 2016. Benefit for income taxes was $9.4 million for the year ended December 31, 2017, compared to 0 for the year ended December 31, 2016.

Now I'd like to turn the call over to the operator for any questions. Operator?

(Operator Instructions) Our first question comes from the line of Joel Beatty with Citi.

The first one is on the trial of MIN-101. Can you discuss a little bit about how you're able to balance being on track for enrollment with enrolling the types of patients you feel are appropriate for the trial, and if you've had to make any adjustments or changes to the types of patients you're enrolling?

Thank you, Joel, and Rémy 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 II meeting we had with the FDA, it was clearly discussed that, I mean, the Phase III should be as close as possible to the Phase IIb study we have run. So obviously, we could really learn a lot from the Phase IIb in order to design the right Phase III. This said, as everybody knows, I mean, in the Phase III 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're dealing with negative symptoms in schizophrenia, you really need to get a good hint about the history of the patient 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 the 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 decision stays 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're also doing in order to ensure that, I mean, the quality and -- is the same as the one we had in the Phase IIb. We have this continuous control of the key outcomes, particularly, obviously, the PANSS scale, the 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. I 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 III, learn a lot from the Phase IIb and really reproduce the same results.

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

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 this 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 Merck 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 on the specificity of this pathway is that I think this pathway is enough to induce the effects we hope to see on sleep. But here, we have already a lot of data coming out from polysomnography, which is this 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 the different sleep stages you need to have in order to have what we call a restorative sleep. So in other words, a deep sleep is maintained. We have no major effect on REM sleep. So 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, I mean, you have some impairment during daytime functioning. So clearly, this was the reason why.

What is also interesting is that when you think about the 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, a specific orexin-2 like our molecule is mostly mediated via histamine. 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 molecule. So there are a lot of aspects which are really speaking in favor of an orexin specific to -- 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 overactivated and is signaling to the brain that something is not going extremely well. You also have the HPA axis, 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 overactivity 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 mood, and this is also something we have demonstrated. So I think these are really the reasons why we have really focused on this molecule and we wanted, really, to have this development going on with Janssen.

And so obviously, the future, I mean, the study is currently ongoing, we will test several other aspects like, for example, what is going on -- and 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, obviously, to the effect on sleep and insomnia and on depression. But I mean, all these kind of things are very important in order to cover the complete unmet medical need we have today in insomnia and in depression. And we know very well that with diverging molecules we have currently available for insomnia, we have a lot of side effects. We have cognitive impairment. We also have these difficulties to stand up and not to have problems, particularly in the elderly. So there are a lot of attributes of this molecule which I think makes this approach unique.

And our next question comes from the line of Jason Butler with JMP Securities.

It's Ron for Jason. I had a couple on roluperidone. Can you speak to the importance of the personal and social performance secondary endpoint in the Phase III? And then are there any planned interims in that trial?

So clearly, I mean, just to make the things extremely clear to everybody, it is really clear that, I mean roluperidone, if the Phase III primary endpoint, which is a moderate negative score, is showing the same effect as what we have seen in the Phase IIb study, I mean, this is enough in order to get the drug approved, yes. I mean, because it has always been stated that any drug which is improving negative symptoms and, more important, is specifically improving negative symptoms, which is our case, this is a ground of approval, yes. This said, obviously, what everybody hopes is by improving negative symptoms, you're also improving function. So all the everyday functioning of the patient that is, again, able to cope with very simple things like standing up in the morning, taking a shower and being engaged in a more active social life, yes.

So this is the reason why, I mean, we have decided, by discussing this, obviously, with the FDA to include a 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're hitting a PSP overall score and afterward, obviously, you have some subscores, you will understand better what is really the overall effect of the molecule. If you have this, this is obviously an additional layer. And we'll explain to the prescriber, to the patient and to the families of the patients 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 on the primary endpoint. If the secondary is also hitting and -- I mean, as you remember in the Phase IIb, we had an effect on PSP. So there -- definitely, we know that, that means the molecule is improving function already. I think this will be an added value at the end of the day.

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

Can you repeat? I did not understand.

Planned interims for the Phase III. Do you guys have any planned interims?

No, we have no interim analysis planned. Sorry if this -- if I really got the question. Definitely not. I mean, this is a 500 patient study, and we have no interim analysis planned, definitely not.

Okay. I had the same question for seltorexant in the Phase IIb. Are there any interims in those trials, either MDD or insomnia?

So in the -- 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 III. So indeed, for these 2 studies, indeed, there is an interim analysis which is planned. And you can adapt the dose for Part B of the study, if necessary. So this is the reason why we have this interim analysis in order to be as adequate as possible in defining the doses which will be used moving forward into Phase III.

Okay. Great. And then I had a couple questions on MIN-117. What are the gated -- I know you said you're going to start the Phase IIb shortly, but what's the gating factor for starting that trial? And did you have meetings with the regulators following the Phase IIa?

No. I mean, the factor is purely technical, I mean, to get these different approvals from the [assigned] committees and this is not something, which is -- is it actively in -- going on. And there is no good reason why, I mean, we should not get all these approvals. So it's purely technically -- 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. But I mean, we are very close to have the first patients in this study.

(Operator Instructions) And our next question comes from the line of Biren Amin with Jefferies.

I noticed on clinicaltrials.gov that with seltorexant, there was a trial initiated to look at 3 different formulations recently. Can you just talk about that a little bit, the objectives of that study and what you're trying to optimize there?

So we are not trying to optimize anything. To be very clear, I mean, we definitely are moving forward the formulation that we have -- we are currently using in the Phase IIb studies and the formulation which are -- have been used in the previous trial. This 3 formulation trial is more a technical trial about evaluating the particle size of the final 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 PK/PD and the pharmacokinetic aspects 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 the clinical efficacy or to manage something which is related to the indications we are going after. It's purely for the CMC dossier.

Okay. And then for the MDD trials, you're 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?

I think the answer is we are not going after the 2 aspects. It's really an exploratory study. This study is a study in order to compare, indeed, on a 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 III study. So this study, compared to the 2 other studies which are extremely well powered, this is an exploratory study in order to pick up the differentiating aspects between MIN -- between seltorexant -- sorry, I was wanting to say MIN-202, between seltorexant and quetiapine. So this is the purpose of the study; and so, clearly, to set hypothesis which will be included in the Phase III program.

Okay. And then just in terms of time lines across the 3 seltorexant studies, which do you -- would you anticipate reading out first?

It's a little bit too early to say which one is reading out first. What is clear is that, I mean, the 3 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 except, I mean, the readout of the study will be in the first half of 2019, as for the 3 one -- for the 3 studies, sorry. So today, again, I think it's too early, but things are really going very well in terms of recruitment. And so this is, I think, what I can say today, I think.

And I'm showing no further questions, so this does conclude today's Q&A session. I'd like to return the call to Mr. Rémy Luthringer for any closing remarks.

So thank you so much. Thank you for your time, and I'm really looking forward to give you an update in a very close future. Thank you, again.

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.