Minerva Neurosciences Inc (NERV) 2020 Q3 法說會逐字稿

Welcome to the Minerva Neurosciences Third Quarter 2020 Conference Call. (Operator Instructions) This call is being webcast live on the Investors section of the Minerva's website at ir.minervaneurosciences.com. As reminded, 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 third quarter 2020 financial results and business highlights became available at 7:30 a.m. 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 Securities and Exchange Commission 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; 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 quarterly report on Form 10-Q for the quarter ended September 30, 2020, filed with the SEC on November 2, 2020. Any forward-looking statements made on this call speak only as of today's date, Monday, November 2, 2020 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. I hope everyone is doing well. As we approach our meeting with the FDA on November 10, we remain enthusiastic about the potential of our lead product, roluperidone, and believe it will have a significant impact on the lives of patients with schizophrenia.

Our confidence is based on our experience and the clinical database compiled today with this compound. We are motivated to bring roluperidone to patients as quickly as possible as there is currently no approved treatment for negative symptoms which remains the leading unmet need of patients with disease, their families and their treating physicians. We announced the top line results of the 12-week double-blind part of our Phase III study in May. Also the study did not achieve its primary objective. Results obtained with a 64-milligram dose demonstrated the early onset of beneficial effect on negative symptoms that translated into functional improvements.

Roluperidone was also generally well tolerated in this trial with a safety profile comparable to placebo. Following that announcement, we have completed extensive analysis of data from this trial and others, including an integrated analysis of data from our Phase IIb and Phase III trials that shows a highly significant separation between the 2 doses of roluperidone and placebo. In addition, we now have a large amount of data from the 40-week open-label phase of this trial, which is on schedule to complete in the first quarter of 2021.

In late September, we provided these findings to the FDA in preparation for the Type C meeting scheduled for the 10th of November. During the forthcoming meeting, our findings will be discussed with the FDA, and we expect to receive the agency's feedback about the next steps in the development and potential regulatory approval of roluperidone. We will provide a further update of our meeting, once the minutes have been finalized by the FDA, which is expected in December.

In summary, the recent Phase III data combined with all of the data accumulated over the last few years, continue to support our belief that roluperidone can become an important treatment for schizophrenia patients. I will now turn it over to Geoff for the financial update.

Thank you, Rémy. Earlier this morning, we issued a press release summarizing our operating results for the third quarter ended September 30, 2020. A more detailed discussion of our results may be found in our quarterly report on Form 10-Q filed with the SEC earlier today. Cash, cash equivalents and restricted cash as of September 30, 2020, were approximately $32.6 million. During the 9 months ended September 30, we raised $12.1 million net of fees from the public offering of stock and, therefore, we presently expect that the company's existing cash and cash equivalents will be sufficient to meet its anticipated capital requirements into early 2022 based on our current operating plan. The assumptions upon which this estimate is based are routinely evaluated and may be subject to change.

R&D expenses for the 3 and 9 months ended September 30, 2020, were $4.6 million and $18.5 million, respectively compared to $9.7 million and $29.6 million for the same period in 2019.

The decreases in R&D expenses in 2020 primarily reflect lower development expenses for the Phase III clinical trial of roluperidone and the completion of the Phase IIb clinical trial of MIN-117 in December 2019. We expect R&D expenses to decrease during 2020 compared to 2019 as we have completed the MIN-117 clinical trial and the 12-week double-blind portion of the Phase III clinical trial of roluperidone.

G&A expenses for the 3 and 9 months ended September 30, 2020, were $3.5 million and $13.5 million, respectively, compared to $4.6 million and $13.9 million for the same period in 2019. The decrease in G&A expenses in the 3-month period was primarily due to a decrease in noncash stock-based compensation expenses and lower commercial expenses. And the decrease in G&A expenses in the 9-month period was primarily due to lower commercial expenses. Net loss for the 3 months ended September 30, 2020, was $8.1 million or a loss per share of $0.19 basic and diluted compared to a net loss of $14 million or a loss per share of $0.36 basic and diluted for the 3 months ended September 30, 2019.

For the 9 months ended September 30, 2020, net income was $9.3 million or $0.23 basic and diluted compared to a net loss of $42.3 million or a net loss per share of $1.08 basic and diluted for the 9 months ended September 30, 2019. Collaborative revenue was $41.2 million for the 9 months ended September 30, 2020, compared to 0 for the same period in 2019, an increase of $41.2 million. The increase in collaborative revenue was a result of the company's opting out of its co-development and license agreement with Janssen for seltorexant. That revenue was recognized during the second quarter of 2020 as there are no future performance obligations under the agreement.

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

(Operator Instructions) Our first question comes from Jason Butler with JMP Securities.

It's Roy on for Jason. I guess on -- probably can't say anything about this, but since you've submitted the material for the Type C meeting to the agency, have you had any feedback from the agency on the material, anything else? And then it looks like you sold about $7 million worth of shares for the ATM in the quarter. Have you guys used the ATM in the current quarter? And how much is remaining under that facility?

Thank you for the question. So Rémy speaking. I will take the first part and the second part, I will give it over to Geoff here. So As you know, when you're submitting your briefing book to the FDA and you have date fixed for the meeting, you get the feedback from the FDA a few days before the meeting happens. So as of today, we did not get any feedback from the FDA. So just recognized receipt of the briefing book, but I think their thoughts and comments on the different questions we asked will come later this week or early next week. Geoff, can you take the other one, the other part?

Yes, of course. Thanks for the question. We sold around $5 million worth of stock in the second quarter, we sold $7 million in the third quarter. We haven't sold any stock in the fourth quarter. We had an ATM facility of $50 million in place. We've sold $12 million, that leaves $38 million remaining under the ATM.

Your next question comes from Tom Shrader with BTIG.

This is Julian on for Tom. Keeping in mind, it's -- a lot is still to be determined from your meeting with the FDA next week. I was wondering if you could talk about what preparations you've been making ahead of that meeting for the range of possible outcomes here. And how fast you can move forward from there, whether it be additional analysis following an NDA or an additional trial?

Important question and, obviously, the success is in anticipation, yes. And as you can guess, we are anticipating the different outcomes. Also with all the data we have generated and we put in the briefing book, we are extremely confident that the FDA will understand that we have really very compelling data as you already have seen, when you combine the 2 studies, Phase IIb and Phase III. The 2 doses are showing an effect on the primary endpoint, which is the PANSS negative score according to Marder. We have a functional improvement. We know that evolution is a driver of the effect we are seeing, and this is really a key driver.

But indeed, obviously, we are anticipating any outcome, and we are also working currently on what would be the next steps if, I mean, the FDA is requesting us to do another study. Again, we don't expect this or we are doing all what we can that this will not happen and we have already also anticipated, obviously, the analysis of the extension phase or the extension part of the study, which will end in the first quarter of next year. So all this is ongoing. All is in preparation and when we will get the feedback, the final feedback, from the FDA during the course of December, we will be able to react extremely fast. So because I think we have anticipated all these different types of scenarios.

Our next question comes from Joel Beatty with Citi.

If another Phase III trial needs to be done, could you discuss the potential trial design there? And any differences that could help enhance the probability of success?

Yes. So obviously, I mean, the final study design will be based on the feedback or the discussion or the interaction with the FDA. But clearly, I mean, there are some parts which are completely clear that we will not run them. So for example, we will not have an extension in this study, so the 9-month extension, we're here, because as you know, this is really to -- the extension is here to fix the box of 100 patients exposed to the drug for 1 year. And as of today, we have already a lot of patients who have completed the extension. So definitely, we're taking this box.

Now concerning the study, in terms of primary endpoint, I guess it will come out from the PANSS scale as we did for the Phase IIb and the Phase III. It will be discussed which kind of endpoint, but I think that, I mean, we will still discuss about negative symptom score coming out from PANSS Japan like the Marder negative score that maybe can be fine-tuned. But where I can see some, how to say, improvements or some modifications, if I can put this in brackets is in the secondary endpoints. As you know, we already have very good hint. I mean, on a functional level with PSP, total scores in these patients are improving. On the functional level, they are functioning better. So maybe we can fine-tune this aspect because, best of my knowledge, no (inaudible) has ever improved negative symptoms, and as a consequence, has an improvement in terms of functioning. So I think this is where I mean the discussion might end if we have to do an additional study.

Next question comes from Douglas Tsao with H.C. Wainright.

Just -- Rémy, a lot of the sort of key subjects have already been touched upon, but I'm just curious with the ongoing open-label extension. Are there any -- obviously, safety is the key sort of purpose of that. But I'm just curious, are there additional endpoints that are being measured that you think have some -- that have relevance and can really sort of enrich the dataset? And as you think about potentially needing to do other studies or just running studies to support the commercialization, are there things longer term that you would like to look at beyond typical -- that sort of typical sort of 12- to 16-week interval?

Doug, this is a very important question, very important point you're opening here. So clearly, I mean, yes, we are taking the box of long-term safety here, 1-year safety, but I think we discussed this already together. We are measuring efficacy as well. I mean -- and we continue to measure the PANSS, we continue to measure PSP. So we will have data for, I think, a significant number of patients at the end of the day for efficacy. So this is the first thing. And I think it will be important, hopefully, to demonstrate exactly what we have demonstrated in the Phase IIb, which means that after or beyond the double-blind phase of 12 weeks, I mean, patients continue to improve for negative symptoms and functioning. So this is obviously very important.

And I think it was an important aspect. We could discuss end of Phase II meeting with the FDA and, hopefully, we will also be able to discuss this at this meeting -- at this upcoming meeting because We have obviously followed this very carefully, and we are analyzing the data on a regular base to see where the things are going. But I think there is beyond the measures or the scales we're using, I think another aspect which is important, in addition to the safety aspect, is how many patients stayed in the study and how many patients are dropping out from the study and for which reasons? And one important aspect is to know how many patients are dropping out for relapses of positive symptoms because keep in mind here that I mean we have a monotherapy. We have not had all antipsychotics onboard.

And if we can demonstrate that over a period of 1 year, these patients are stable or even improving slightly on positive symptoms without the relapses, I think this is an important aspect as well. So a lot of data coming out from this extension. A lot of data are probably of interest to be discussed with the FDA. And what I can say is that, I mean, we are monitoring this continuously, and I think we are pointing towards the right direction.

Okay. Great. And Rémy, can you remind us when we would expect to see data, the investment community from that -- from the open-label extension or from the extension?

So we will have the last patient last visit during the first quarter of next year. So really, I mean, I don't see anything which would delay this. So you should see something as soon as we had the chance to analyze this data. So probably towards the end of the first quarter, beginning of the second quarter.

(Operator Instructions) Our next question comes from Myles Minter with William Blair.

Just wondering -- probably for Rémy, the differences between the significant results you saw on the PSP, and unfortunately, the endpoint that slightly missed on the Marder NSFS, have you done further analysis to fully understand what the Marder scale may be capturing or not capturing that isn't reflected in the PSP or vice versa? I'm trying to understand what components crossover and what don't, so that you and also the regulators can get a better sense of what efficacy components are important for this drug?

This is a nice question, Myles. So I think the way to analyze the data or what you can get out of the data, I think, is a little bit different than what you have presented, also where you hinted to. Why I'm saying this? Keep in mind that it means the Marder negative score coming out from the PANSS, you know that you have the possibility to split this score into 2 dimensions: expression and experience. And you know that experience is highly correlated or linked with functional improvement. So this has been really described very well in the literature. And if you remember our data when we presented our top line results, we have a significant effect even at week 12 in terms of experiences.

So already, I mean, if you go with a sub-score of the Marder negative score, you see a functional improvement. And I think this is really what is correlated, I'll put it in brackets, as I mean, what is linked to functional improvement and what we have seen in PSP total score. So it's not a surprise. And if you remember in the Phase IIb, we had exactly the same. I have to say that, I mean, like in the Phase IIb 64-milligram is giving you a stronger functional improvement. And not a surprise that PSP, again, is showing a more significant improvement with the battery effect size with 64-milligram in the Phase III or in the -- like in the Phase IIb.

But again, I think there is a link here. Why is the total PANSS scale -- negative score, sorry, from according to Marder coming out of the PANSS did not show significance? Keep in mind that week 4 and week 8 were really significant compared to placebo. And we really missed for not a lot. I mean week 12, we're already analyzing what is coming out from the Marder negative score. You have obviously the 5 negative items which are really common, whatever the way you're analyzing negative symptoms. And afterwards, you have G16, for example, which is added, which is coming out from general psychopathology.

And more of the discussion is that may G16 is, yes, looking to negative symptoms, but might also be linked, for example, to positive symptoms. So I think what is an addition to expression is probably less linked to negative symptoms than the subscore of expression. So -- of experience, excuse me. So really, I mean, I think all is pointing towards a functional form improvement based on sub-analysis, again, as the PANSS negative score and functional PSP.

And I think last but not least, sorry to be so long, but we could demonstrate again by going to even more granularity inside the Marder negative score coming out from the PANSS and having an estimate of avolition. If you remember, avolition was a driver in the Phase IIb. If you extract avolition, again, from this Marder score, you see, again, that avolition is really giving a very significant effect with our drug compared to placebo. So I think the story comes together. It's logic compared to the Phase IIb. So I think this is my best explanation.

No, that's helpful. And then maybe one for Geoff. I guess as you think of best case scenarios coming out of this meeting being proceed to filing versus running another trial versus something else. How do you think about the differential near-term capital needs for the company and getting that over the line. And also can you -- is there any cause to opt back into the seltorexant program when you opted out? Or is that completely off the table now that Janssen's proceeded in the Phase III trials?

Thanks, Myles. I'll take your second question first. So there is no opt back in whereof and that's the sort of final position. Of course, as you know, we have a mid single-digit royalty on worldwide sales of seltorexant at Janssen. We'll be making at some point in the future once the Phase III is complete.

Coming back to your first question, obviously, our first priority is to continue with the extension to the study. And obviously, then there's a number of steps that we have to go through in order to file the NDA. Obviously, depending on what we get back from the FDA, we'll need to raise capital at some point in the future. I think it's too early to speculate on what that side of capital raise will be. But obviously, after we've discussed that with the FDA and had the minutes finalized, we'll discuss that with investors and analysts once that number is finalized.

Our next question comes from Biren Amin with Jefferies.

This is Jeet Mukherjee on for Biren. Maybe 2 quick questions from me. First, if another confirmatory study is required, how quickly could you get that up and running? And the second question is perhaps maybe for Rémy. Your data, I think, showed that on the PANSS classic 7 item negative score, the 64-mg dose was statistically significant. So is there any analysis on your part -- on which items from the Marder scale didn't perform so well? And do you perhaps plan to use the classic scale as maybe a primary or perhaps co-primary endpoint for any subsequent Phase III that might be required?

Yes. So the first part I already addressed this one in one of the previous questions. So we are completely ready, I mean, to push the button if needed, I mean, for an additional study. So we have anticipated feasibilities. We have anticipated a study design. We have anticipated the infrastructure in terms of CRO, and how we will work with the CRO in order to run the study. So this is really ready-to-go afterwards. You have always the regulatory approval in the different countries and all these kind of things, but definitely as soon as we have the minutes, as soon as we know what we have to do, if we have to do it, I mean we are ready.

Coming to your second part, I mean, it's again a little bit linked to what I tried to explain based on the previous question. Obviously, we have analyzed item-by-item, question-by-question. We have analyzed our results coming out from the PANSS and particularly from the PANSS negative score according to Marder. And as I said, I mean, it's very clear that I mean if you're going with the items or the questions, which are mostly related to avolition, we know that the drug is extremely active compared to placebo. So this is just, if needed, a confirmation of what we have seen in the Phase IIb.

As I also mentioned, I mean, you can split the PANSS negative score according to Marder into experience and expression. And here again, I mean, we can really see that, I mean, the question/items, which are related to functional improvement or mostly related to functional improvement are, again, very significant with good effect sizes compared to placebo. So yes, there are a few items which are left, which are not showing as -- or a few questions, which are left, which are not showing the same statistical significance. But again, I think all what is related or what is connecting as a measurement via the PANSS of functional improvement is really showing a significant improvement.

And maybe a more general comment on all this. When you're going really to the (inaudible) and to the current consensus of the scientific KOL medical community, I think everybody's stats is not in agreement that I mean, avolition is really an extremely important key driver of what happens in schizophrenia. These are patients, adolescents, they're good at school, and suddenly, they're losing the ability to really get engaged, to be interested in an activity, which is basically avolition. And it is very well demonstrated that, obviously, afterwards, I mean, these patients are presenting with other symptoms like anhedonia or alogia, whatever you want. But I mean this is really a consequence of avolition.

So I think this will be an interesting discussion with the FDA because I know that the FDA -- I mean, I'm speaking here about the psychotic division is interested in subscores to have drugs which are more specifically addressing some parts of a construct because negative symptoms is a construct basically. It's not a symptom, it's a construct of symptoms. And I'm really confident that we will have a very exciting and constructive discussion with the FDA around (inaudible).

Thank you. And I'm currently showing no further questions at this time. I'll turn the call back over to Rémy Luthringer for any closing remarks.

Yes. Thank you so much. So thank you all for listening, for all your questions. I think all very important questions. And as you can guess, I mean, we are really -- the complete company is really focused on this meeting we will have on the 10th of November. And as soon as we have agreed on the final minutes with the FDA, we will obviously share all this with you as soon as we have all the data together. So thank you again, and take care.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect. Have a great day.