Minerva Neurosciences (NERV) Q3 2020 Earnings Call Transcript

Minerva Neurosciences (NERV -3.57%)
Q3 2020 Earnings Call
Nov 02, 2020, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Minerva Neurosciences third-quarter 2020 conference call. [Operator instructions]. The call is being webcast live on the investor's section of Minerva's website at ir.minervaneurosciences.com. As a reminder, today's call is being recorded. I will now turn the call over to William Boni, vice president of investor relations and corporate communications at Minerva. Please proceed.

William Boni -- Vice President of Investor Relations and Corporate Communications

Good morning. A press release for 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. Remy 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 Remy Luthringer.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

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 a 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 to date. With this combined, 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 for patients with the disease so families end up treating physicians. We announced the top-line results of the 12-week double-blind part in a Phase 3 study in May. Also, the study did not achieve its primary objective.

Results obtained with a 64mg dose demonstrated the early onset of beneficial effects 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 an extensive analysis of data from this trial and others, including an integrated analysis of data from our Phase 2b, and Phase 3 trials that show a highly significant separation between the two 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 on 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. Apparently, 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 3 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 not turn it over to Geoff for the financial update.

Geoff Race -- Executive Vice President, Chief Financial Officer, and Chief Business Officer

Thank you, Remy. 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, we're approximately $32.6 million.

During the nine months ended September 30th, we raised $12.1 million net of fees from the public offering of stock, and therefore, we presently expect of 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 three and nine 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 3 clinical trial of roluperidone and the completion of the Phase 2b 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 under the 12-week double-blind portion of the Phase 3 clinical trial of roluperidone. G&A expenses for the three and nine months ended September 30, 2020, where $3.5 million, and $13.5 million respectively, compared to $4.6 million and $13.9 million for the same periods in 2019. The decrease in G&A expenses in the three-month period was primarily due to a decrease in non-cash stock-based compensation expenses, and lower commercial expenses. And the decrease in G&A expenses in the nine-month period was primarily due to lower commercial expenses.

Net loss for the three 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 of the three months ended September 30, 2019. For the nine 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 nine months ended September 30, 2019. Collaborative revenue was$41.2 million for the nine months ended September 30, 2020, compared to zero for the same period in 2019, an increase of $41.2 million. The increase in collaborative revenue was the result of the companies opting out of its co-development and license agreement with Janssen to 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?

Questions & Answers:

Operator

[Operator instructions]. Our first question comes from Jason Butler with JMP Securities. Your line is now open.

Unknown Speaker

Hi. It's Ryan for Jason. Thanks for taking my questions. I guess on probably can't say things 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 A. T.M in the quarter.

How do you guys use the A.T.M in the current quarter, and how much is the remaining under that facility. Thanks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

So, thank you for the question. So, Remy speaking here. I will take the first part and the second part, I will give it to Geoff. And so, as you know when you are submitting your briefing book to the FDA do you have a 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. And I just recognized the received offer, a 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 [Inaudible].

Geoff Race -- Executive Vice President, Chief Financial Officer, and Chief Business Officer

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 A.T.M. facility of 50 million in place. We sold 12.

That leaves 38 million remaining under the A.T.M.

Unknown Speaker

Got it. Thank you.

Operator

Thank you. Our next question comes from Tom Schrader with BTIG. Your line is open.

Julian Harrison -- BTIG -- Analyst

Hi, this is Julian after Tom. Thank you for taking my question. 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 filing an NDA or an additional trial. Thanks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

That's an important question. And another key to the success of dissipation has and as you can guess we are anticipating the different outcomes. Also with all the data, we have generated and we put in a briefing book. We are extremely confident that the FDA will understand that we have really very compelling data as you already have seen it.

When you combine the two studies Phase2b and Phase 3 the two doses are showing an effect on the primary endpoint which is the PANSS negative score according to Marder. We have a faster improvement in that abolition is a driver of the effect we are seeing, and this is really the key driver. But indeed, obviously, we are anticipating any outcome. And we are also working currently on what would be the next steps, I mean if FDA is requesting us to do another study.

Again, we don't expect this, or we are doing all that to present that this will not happen. And we have already also anticipated, obviously, the analysis of the extension of phase or did and 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 faster because I think, we have obviously, paid to go into these different types of scenarios in.

Julian Harrison -- BTIG -- Analyst

Ok. Got it. Thank you. That's helpful.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Joel Beatty with Citi. Your line is open.

Joel Beatty -- Citi -- Analyst

Hi, thanks for taking my questions. If another Phase 3 trial needs to be done, could you discuss the potential trial design there? Any differences that could help enhance the probability of success.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Yes. So. So, obviously, I mean as a final study design will be based on the feedback or the discussion of interaction with the FDA. Yes, but clearly, I mean there are some parts that are completely clear that we will not run them.

So for example, we will not have an expansion in this study. So, the nine months extension this year because as you know this is really the extension is here to fix the box of 100 patients exposed to the drug for one year. And as of today, we have already a lot of patients who have completed the extension so. So, definitely we are taking this box.

Now concerning the study in terms of the primary endpoint. I guess it will come out from a punch scale, as we did for the Phase 2b and Phase 3. It will be discussed which endpoint, but I think that I mean we will still discuss the negative symptom of this core coming out from the PANSS like some other negative score that maybe can be fine-tuned. But where I can see some, I'll just say improvements or some modifications if I can put this in brackets using the secondary endpoints.

As you know, we already have very good teams that are on a functional level with PSP, personal and social performance scale that is improving on the functional levels are functioning better. So maybe, we can fine-tune this aspect because the best of my knowledge no directors have ever improved negative symptoms and as a consequence is an improvement in terms of functioning. So I think this is where it means the discussion might end if we have to do an additional study.

Joel Beatty -- Citi -- Analyst

Remy, great that's helpful. Thanks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Thank you, Joel.

Operator

Thank you. Our next question comes from Douglas Tsao with H.C. Wainwright Your line is open.

Douglas Tsao -- H.C. Wainwright -- Analyst

Hi, good morning. Thanks for taking the question. It's just -- Remy a lot of subjects have already been touched upon, but I'm just curious with the ongoing open-label extension. Are there any -- obviously, safety is a key 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 it can really enrich the data set.

And as you think about potentially needing to do other studies or just running studies to support the commercialization. Are there things long term that you would like to look at beyond the typical 12 weeks to 16 weeks interval. Thank you.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Doug, this is a very important question or a very important point for your opening here. So clearly, I mean yes. We are ticking the box of long term safety here for your safety. But I think, we discussed these already together where we are measuring efficacy as well.

And that's something that we continue to measure upon as 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 Phase 2b which I believe that after or beyond the double-blind phase of 20 weeks. I mean patients continue to improve for negative symptoms and functioning.

So this is obviously very important. And I think was an important aspect we could discuss and the face to meeting reserve with the FDA. And then hopefully, we will also be able to discuss this meeting at this upcoming meeting because we have obviously, followed this very carefully and we are analyzing the data on a regular basis to see where we've seen going. But I think there is beyond those measures.

Some of those cases were using and another aspect which is important. In addition to the safety, aspect is how many patients stage of the study, and how many patients are dropping out from the study, and for which reason. 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 at all under psychotics on board.

And if we can demonstrate that over a period of one year as 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 in the right direction.

Douglas Tsao -- H.C. Wainwright -- Analyst

Ok, great. And Remy, can you remind us when we would expect to see data -- the investment community from that open-label extension from the financing.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

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 have a chance to analyze this data. So probably, toward the end of the first quarter, beginning of the second quarter.

Douglas Tsao -- H.C. Wainwright -- Analyst

Great. Thank you so much.

Operator

Thank you. [Operator instructions]Our next question comes from Myles Minter with William Blair. Your line is open.

Myles Minter -- William Blair & Company -- Analyst

Thanks, for taking the questions. Just wondering probably to Remy -- the differences between these significant results you saw on the PSP and unfortunately that endpoint that slightly missed on the moderate NSFS. Have you done further analysis to fully understand what the modest scale may be captured, or not be capturing that isn't reflected in the PSP or vice versa? I'm trying to understand what components costs are from what Darren so that you and also the regulators can get a better sense of what efficacy components are important for this drug.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

This is a nice question, Myles. So I think is the way to analyze the data of what you can get out of the data, I think is a little bit different than what you have presented where you hinted to us. Why I'm saying this. Keep in mind that the Marder negative score coming out from the PANSS.

You know that you have the possibility to split this score into two dimensions: expression and experience. And that experience is highly correlated or linked with functional improvement. So this has been really described very well. And it's a trend if you remember our data when we presented our top-line results, we have a significant effect even at week 12 in terms of experience.

So already I mean if you go with a site score of the model, negative core you'll see a functional improvement. And I think this is really what is correlated to put it in brackets. As I mean what is linked to functional improvement and what we have seen in PSP pockets corner. So it's not a surprise.

And if you remember in Phase 2b, we have exactly the same. I have to say that the main like in the Phase 2b is 64mg is giving you stronger functional improvement. And not a surprise a PSP again, is showing a more significant improvement. we have a better effect size with 64mg in Phase 3 out in the -- like in the Phase 2b.

But again, I think there is a link here. The way to the PANSS scale negative score, sorry from according to Marder coming out of the punch did not show significant. Keep in mind that week four and week eight were really significant compared to placebo, and we really missed for not a lot them in week 12. When you're really analyzing what is coming out from the Marder negatives score.

You have obviously, five negatives items which are really common whatever the way you are analyzing negative symptoms. And afterward, you have G16 for example which is adequate is coming from general psychopathology and the more discussion is that maybe G16 is -- yes, looking for negative symptoms with might below to be linked for example to positive symptoms. So I think what is in addition to expression is probably less linked to negative symptoms. Let's say a subscore off of expression.

So often expressed, experience excuse me. So really I mean I think all are pointing toward reforms and improvements based on some analysis again of 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 insides of the modern negative score coming out from the PANSS and having an estimate of abolition. If you remember, abolition was a driver interface to be if you extract abolition again, from this modest core you'll see again that abolition is really giving it a very significant defect result of the drug compared to placebo.

So I think the story comes together. It's logic compared to Phase 2b. So I think this is my best explanation.

Myles Minter -- William Blair & Company -- Analyst

That's helpful. And then maybe one-third Jeff, I guess as you think of best-case scenarios coming out of this meeting being you know proceed to file first is running another trial or there's 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 close to opting back into the seltorexant program when you opted out or is that completely off the table now that chances proceeded in a Phase 3 trials. Thanks.

Geoff Race -- Executive Vice President, Chief Financial Officer, and Chief Business Officer

Thanks, Myles. I'll take your second question first. So there is no back in, wear out and that's the final position. Of course, as you know, we have a mid-single-digit royalty on worldwide sales of self-direction of Janssen.

We'll be making at some point in the future wants for Phase 3 is complete. I'm 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 size of capital raised will be. But obviously, after we've discussed that with the FDA and had the minutes finalized, we'll discuss that with the investors and analysts once that number is finalized.

Myles Minter -- William Blair & Company -- Analyst

Great. Thanks for answering the questions, and good luck everyone on November 10th. That should be interesting. Thanks.

Geoff Race -- Executive Vice President, Chief Financial Officer, and Chief Business Officer

Thanks, Myles.

Operator

Thank you. Our next question comes from Biren Amin with Jefferies. Your line is open.

Jeet Mukherjee -- Jefferies -- Analyst

Yes. Hey, good morning guys. This is Jeet Mukherjee sitting in for Biren. Maybe two 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 Remy, your data I think showed that on the PANSS classic seven-item negative score, the 64 mega-dose was statistically significant. So is there any analysis on your part on which items from a Marder scale didn't perform so well? And do you perhaps plan to use the classic scale of maybe a primary or perhaps called primary endpoint for any subsequent Phase 3 that might be required? Thanks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

So the first part is already addressed this one with one of the previous questions, so we are completely ready. I mean to push a button if needed definitely for an additional study. So we have anticipated the feasibility. We have anticipated the 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 afterward. You have always as regulatory approval in the different countries, and there was just kind of sinks. But definitely, as soon as we have a minute.

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 a game a little bit Linker what I tried to explain based on the previous question. Obviously, we have analyzed the item by item. Question by question.

We have analyzed our results coming out from the PANSS and particularly from the PANSS and negatives score according to Marder. And as they say, I mean it's very clear that I mean if you're going with the items, those the questions which are mostly related to abolition we know that the drug is extremely active compared to placebo. And so this is just -- if needed confirmation of what we have seen in the Phase 2b. As I also mentioned I mean you can split the PANSS negative score according to modeling to experience and expression.

And here again, I mean, we can really see that I mean this is a question slash items which are related to functional improvement or most importantly related to functional improvement are again very significant. That was good effect sizes compared to the placebo. So yes, there are few items that are left, which are not showing as to your questions which are left which are not showing the same statistical significance. But again, I think all that is related to what is connecting as a measurement we have a PANS of functional improvement is really showing a significant improvement.

And maybe a more general comment on those is -- when you're going really to the literature and the current consensus of the scientific care well medical community. I think everybody starts is not in agreement that I mean abolition is really an extremely important key driver of what happens in schizophrenia. These are patients' adolescence that's cool and suddenly they're losing the ability to really get engaged to be interested in an activity which is basically abolition. And it is very well demonstrated that obviously, afterward I mean just patients are presenting with other symptoms like anhedonia, [Inaudible] but I mean this is really a consequence of abolition.

So, I think this will be an interesting discussion we see with the FDA because I know the FDA, I mean I'm speaking here a bunch of psychiatry division is interested in SAP's course to have drugs which are more specifically addressing some parts of the construct because negative symptoms is a construct. Basically, it's not a symptom, it is a construct of symptoms, and I'm really confident that we will have a very exciting and constructive discussion with the FDA on these.

Jeet Mukherjee -- Jefferies -- Analyst

Great. Thank you so much.

Operator

Thank you. Currently, showing no further questions at this time. I'll turn the call back over to Remy for any closing remarks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Yes. Thank you so much. So thank you all for listening. For all your questions.

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

Operator

[Operator signoff]

Duration: 34 minutes

Call participants:

William Boni -- Vice President of Investor Relations and Corporate Communications

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Geoff Race -- Executive Vice President, Chief Financial Officer, and Chief Business Officer

Unknown Speaker

Julian Harrison -- BTIG -- Analyst

Joel Beatty -- Citi -- Analyst

Douglas Tsao -- H.C. Wainwright -- Analyst

Myles Minter -- William Blair & Company -- Analyst

Jeet Mukherjee -- Jefferies -- Analyst

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