U.S. Markets open in 1 hr 19 mins

Edited Transcript of ITCI earnings conference call or presentation 8-May-19 12:30pm GMT

Q1 2019 Intra-Cellular Therapies Inc Earnings Call

NEW YORK May 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Intra-Cellular Therapies Inc earnings conference call or presentation Wednesday, May 8, 2019 at 12:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Andrew Satlin

Intra-Cellular Therapies, Inc. - Executive VP & Chief Medical Officer

* Juan Fernando Sanchez

Intra-Cellular Therapies, Inc. - VP of Corporate Communications & IR

* Kimberly E. Vanover

Intra-Cellular Therapies, Inc. - SVP of Early Stage Clinical Development & Translational Medicine

* Lawrence J. Hineline

Intra-Cellular Therapies, Inc. - Senior VP of Finance, CFO, Treasurer and Assistant Secretary

* Mark Neumann

Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer

* Sharon Mates

Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President

================================================================================

Conference Call Participants

================================================================================

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Marc Harold Goodman

SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst

* Matthew Lee Kaplan

Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research

* Owen J. Drinkwater

RBC Capital Markets, LLC, Research Division - Associate

* Robert Cummins Hazlett

BTIG, LLC, Research Division - MD

* Subhalaxmi T. Nambi

Cowen and Company, LLC, Research Division - Research Associate

* Sumant Satchidanand Kulkarni

Canaccord Genuity Limited, Research Division - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, ladies and gentlemen, and welcome to the Intra-Cellular Therapies Inc. First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call may be recorded. It is now my pleasure to hand the conference over to Mr. Juan Sanchez, Vice President of Investor Relations.

--------------------------------------------------------------------------------

Juan Fernando Sanchez, Intra-Cellular Therapies, Inc. - VP of Corporate Communications & IR [2]

--------------------------------------------------------------------------------

Thank you, operator. Good morning, and thank you all for joining us for today's conference call. Our earnings press release providing a corporate update and details for the company's financial results for the first quarter ended March 31, 2019, crossed the wire a short time ago and is available on our website at intracellulartherapies.com.

Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Dr. Andrew Satlin, Executive Vice President and Chief Medical Officer; Mark Neumann, Executive Vice President and Chief Commercial Officer; Dr. Kimberly Vanover, Senior Vice President of Early Stage Clinical Development and Translational Medicine; Larry Hineline, Senior Vice President and Chief Financial Officer; and Michael Halstead, Executive Vice President and General Counsel.

As a reminder, during today's call, we will be making certain forward-looking statements. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of the company's product development candidates, our clinical and nonclinical plans, our plans to present or report additional data, the anticipated conduct and results of ongoing and future clinical trials, plans regarding regulatory filings, future research and development, our plans regarding the commercialization of lumateperone and possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You're cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligations to update such statements.

I will now turn the call over to Sharon.

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [3]

--------------------------------------------------------------------------------

Thanks, Juan. Good morning, everyone, and thank you for joining us. Today I will provide an overview on our progress with our lumateperone clinical programs. Mark Neumann, our Chief Commercial Officer will discuss our commercial preparations and Andy Satlin, our Chief Medical Officer will provide an overview of our progress in our other clinical research programs.

Then Larry Hineline will review our financial results, and we will open the line for Q&A. Our NDA for lumateperone for the treatment of schizophrenia is under review by the FDA and the PDUFA target action date is September 27, 2019. We believe that our schizophrenia clinical development program for lumateperone provides evidence and support of the efficacy and safety for the treatment of schizophrenia and potentially represents an important advance for patients and the psychiatric community.

We continue to advance our clinical programs for lumateperone. At a recent meeting of the Schizophrenia International Research Society or SIRS, we presented additional results from our lumateperone long-term safety study or Study 303 in patients with stable symptoms of schizophrenia.

This study switched patients from standard of care antipsychotics to lumateperone for a treatment duration of up to 1 year. In this study, lumateperone was generally well tolerated and was associated with statistically significant improvements from baseline on key cardiometabolic and motor measures that are often impacted adversely by other antipsychotic medications. Patients treated with lumateperone remained stable with respect to their symptoms of schizophrenia upon switching from standard of care.

Importantly, a mean body weight rate reduction of 3.16 kilograms was observed at 1 year of treatment with statistically significant reductions from standard of care baseline in total cholesterol, LDL cholesterol and prolactin while other cardiometabolic parameters remained stable. There were no signs of treatment-emergent extrapyramidal side effects, akathisia or dyskinesia. These results are consistent with prior findings in our short-term studies, and we are encouraged by the unique safety and tolerability profile of lumateperone and its potential to improve the treatment of individuals with neuropsychiatric and neurologic disorders. At SIRS, we presented results on the improvements and symptoms of depression seen in our long-term safety study with lumateperone in patients with stabilized schizophrenia experiencing moderate-to-severe comorbid depression.

Depression has been reported during all stages of schizophrenia. Prevalence rates for depression and schizophrenia may vary, but have been reported to be as high as 60%.

Symptoms of depression contribute substantially to functional and social impairment as well as increase the risk for suicide. In our study, the antidepressant effects of lumateperone were assessed using the Calgary Depression Scale for Schizophrenia or CDSS, a validated scale to assess depression in patients with schizophrenia.

In these patients with moderate-to-severe depression, defined by a CDSS score of at least 6 at baseline, lumateperone treatment was associated with marked improvement in symptoms of depression.

Specifically, mean CDSS scores decreased by approximately 60% from 7.4 baseline to 3.1 at day 300. In addition, 60% of patients experienced a clinically meaningful reduction in depressive symptoms of at least 50%. Importantly, lumateperone improved symptoms of depression, not only as a monotherapy in patients who were not on an antidepressant, but also adjunctively in patients who were taking antidepressants and still exhibiting symptoms of depression. These data extend results we previously reported on improvements in depressive symptoms seen in patients with acute symptoms of schizophrenia and comorbid depression.

These results reinforce the positive feedback we have received from the medical community and from patients and continue to support our commitment to the development of lumateperone for the treatment of a range of mood disorders.

Our bipolar depression program is ongoing, and we expect top line results from our 2 monotherapy studies, Study 401 and Study 404 later this quarter. In addition, our program in major depressive disorder, MDD, is ongoing. In order to explore the effect of different modes of drug administration and the potential for rapid onset antidepressant activity, our program includes the assessment of novel formulations of lumateperone.

Pharmacokinetic studies evaluating these formulations are continuing. We ended the quarter with $312.8 million in cash, cash equivalents and investment securities, which places us in a strong position to advance our development programs and commercial activities.

Before I turn the call over to Mark, who will provide a brief update on our precommercialization efforts, I would like to highlight that we will have presentations describing our lumateperone schizophrenia program at the upcoming American Psychiatric Association annual meeting in san Francisco, which runs from May 18 to May 22.

We look forward to our participation and contribution to this important global medical meeting. Following Mark's comments, Andy, who just presented our ITI-214 study in Parkinson's disease at the American Academy of Neurology annual meeting will report on our progress with ITI-214 in Parkinson's disease and other indications. Mark?

--------------------------------------------------------------------------------

Mark Neumann, Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer [4]

--------------------------------------------------------------------------------

Thanks, Sharon, and good morning, everyone. Over the past several months, we have continued to intensify our efforts in preparing critical areas of our organization to support the potential commercialization of lumateperone.

I am pleased with the advancements we are making in building our commercial capabilities in the areas of sales, marketing and managed care and in our manufacturing and supply chain readiness. We also continue to make considerable progress in the implementation of enterprise-wide systems and processes to support our future commercial operations and our growing organization.

As Sharon just mentioned, we will have presentations at the upcoming APA meeting in San Francisco describing our lumateperone program in schizophrenia. I'm also pleased to announce that concurrent with the APA meeting, we will be launching a new disease awareness campaign to highlight for physicians and other health care practitioners, the significant unmet medical needs that remain in the treatment of schizophrenia. Schizophrenia, which afflicts over 2 million patients in the United States continues to place a substantial burden in suffering, disability and costs on patients and caregivers.

We have conducted extensive market research, including speaking directly with individuals suffering from schizophrenia and their caregivers to better understand their journey with this disease. And based on these insights, we have developed a campaign that features actual patients and highlights their experiences and the challenges they face at different stages in their journey.

The campaign will be launched later this month at APA and will run for the next several months supported by significant print and digital effort to reach to those health care providers who treat schizophrenia. We are excited to introduce this disease awareness campaign and look forward to providing you with updates on its progress as well as with our overall precommercialization efforts in the upcoming months. I would like to now hand the call back to Andy to discuss our other clinical development program updates. Andy?

--------------------------------------------------------------------------------

Andrew Satlin, Intra-Cellular Therapies, Inc. - Executive VP & Chief Medical Officer [5]

--------------------------------------------------------------------------------

Thanks, Mark. Let me start with the poster I just presented at the 2019 American Academy of Neurology Annual Meeting on results from our Phase I/II clinical trial of ITI-214, our selective phosphodiesterase 1 inhibitor in patients with mild-to-moderate Parkinson's disease maintained on dopamine replacement therapy. The primary objective of the study was to evaluate safety and tolerability of ascending doses of ITI-214 administered for one week.

Favorable safety and tolerability were demonstrated over the full range of tested doses from 1 milligram to 90 milligrams. Efficacy in improving motor systems of Parkinson's disease and motor complications associated with dopamine replacement therapy was explored using multiple scales, providing input from both patients and site raters. We observed improvements in motor systems on top of these patients standard treatment and reductions in dyskinesias at some doses.

Several patients experienced profound improvements in motor impairment while taking ITI-214 only to have these improvements disappear when tested again one month after cessation of ITI-214 treatment. We are currently planning to advance this program with a Phase II proof-of-concept clinical trial of ITI-214 for the treatment of Parkinson's disease.

Our ITI-214 program in heart failure continues to progress. We are conducting an escalating single-dose study of ITI-214, evaluating the hemodynamic effects and safety in patients with systolic heart failure. Clinical conduct for the second cohort 30 milligrams is now ongoing, following completion of the first cohort with 10 milligrams where no safety concerns were identified. We are pleased with the progress being made in our PDE1 program as we continue to explore the potential of this novel mechanism of action in neurological, cardiovascular and other conditions. I will now turn the call over to Larry, who will review the financial result. Larry?

--------------------------------------------------------------------------------

Lawrence J. Hineline, Intra-Cellular Therapies, Inc. - Senior VP of Finance, CFO, Treasurer and Assistant Secretary [6]

--------------------------------------------------------------------------------

Thank you, Andy. I will be reviewing our financial results for the quarter ending March 31, 2019, and provide an overview of our expectations for the use of our cash and investments. The net loss for the first quarter of 2019 was $34.8 million compared with the net loss of $35.5 million for the first quarter of 2018. Basic and diluted net loss was $0.63 per share for the first quarter of 2019 compared to a basic and diluted net loss of $0.65 per share for the same period in 2018. Research and development expenses for the first quarter ended March 31, 2019, were $25 million compared to $30.7 million for the first quarter of 2018.

This decrease of $5.7 million is due primarily to a decrease of approximately $4.8 million of cost associated with the lumateperone development programs, a decrease of approximately $1.7 million of non-ITI-007 projects and overhead expenses, which is offset in part by an increase in labor and stock compensation expense.

General and administrative expenses for the first quarter of 2019 were $11.7 million compared to $6.4 million for the first quarter of 2018. The increase of $5.3 million is primarily the result of an increase in precommercialization cost and to a lesser extent, labor cost, stock compensation expense and rent expense.

Cash, cash equivalents and investment securities totaled $312.8 million at March 31, 2019, compared to $347.5 million at December 31, 2018. We expect these funds will be used primarily for precommercialization activities and related infrastructure expansion, and if our lumateperone NDA is approved for schizophrenia, initial commercialization activities, the development of lumateperone in our late stage clinical programs, the development of our other product candidates, including ITI-214, the continuation of manufacturing activities in connection with the development of lumateperone and general operations.

This concludes our prepared marks. Operator, would you please open the line for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question will come from the line of Jessica Fye with JP Morgan.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [2]

--------------------------------------------------------------------------------

Have you had mid-cycle feedback from the FDA at this point? And have you heard whether there will be an ADCOM for lumateperone ahead of the September PDUFA date?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [3]

--------------------------------------------------------------------------------

Thanks, Jessica. Thanks for the questions too. So as you know we have said in the beginning of this process that we're really not commenting on all of our day-to-day activities. We continuous -- with the FDA, we've continuously had conversations with them and questions which are called request for information and we continue to -- this is the normal course of business in getting through this NDA process. We have said from day one that we believe we are first-in-class new molecular and today -- and as such, we expect to have an ADCOM, and we are preparing for an ADCOM. And we'll update you more as time goes on.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [4]

--------------------------------------------------------------------------------

Okay, great. And as we think about the bipolar Phase III's reading out this quarter. Can you remind us when enrollment completed for the second bipolar depression trial? Just trying to think about when we could expect to see that top line result data within the quarter?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [5]

--------------------------------------------------------------------------------

So I don't remember the exact date, but -- this is Sharon again. I don't member the exact date. The readout will be later this quarter.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [6]

--------------------------------------------------------------------------------

Okay. And maybe just the last one on bipolar depression. For that ongoing Phase III adjunctive study, is there any update you could provide on the enrollment progress for that one?

--------------------------------------------------------------------------------

Andrew Satlin, Intra-Cellular Therapies, Inc. - Executive VP & Chief Medical Officer [7]

--------------------------------------------------------------------------------

I will be able to provide an update on the enrollment and the approximate timeline for completion within the next few months.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

And our next question will come from the line of Brian Abrahams from RBC Capital Markets.

--------------------------------------------------------------------------------

Owen J. Drinkwater, RBC Capital Markets, LLC, Research Division - Associate [9]

--------------------------------------------------------------------------------

This is Owen on for Brian. Thanks for taking the question. You talked a little bit about commercialization preparation. I wonder if we can get some more detail there, whether it'd be on if you're targeting specialties psych centers or more primary care and thoughts on the size of the sales force you might need. And then whether or not you're planning to launch immediately following potential approval at the end of September?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [10]

--------------------------------------------------------------------------------

I will ask Mark to answer that, please.

--------------------------------------------------------------------------------

Mark Neumann, Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer [11]

--------------------------------------------------------------------------------

Yes. And thanks for your question. Let me give you some overview comments on our preparations. As I said in the prepared remarks, we over the past several months have been intensifying our efforts to be ready for launch shortly after approval. And as we think about those preparations, there's really 3 areas. We think about shaping the market, shaping the product and shaping the company. And as I said in my prepared marks, from a market perspective, we have -- are preparing to launch the disease awareness campaign concurrent with APA. And that's a real progressive step for us moving forward. And from the company perspective, we really think about it in 3 areas. We think about hiring talented and experienced senior leadership. We've communicated before that we have the entire commercial leadership team on board at this stage.

We think about the infrastructure that's going to be required to support our transition from a clinical stage organization to a fully integrated commercial organization. And those preparations are proceeding well, and we talk about the commercial capabilities across sales and marketing and managed care. And we're very pleased with how that is going as well. From a targeting perspective, yes, we plan to target those physicians who treat schizophrenia patients and as you can imagine, the majority of those are psychiatrists, but there's other allied health professionals that also treat schizophrenia, and we'll be targeting those as well.

--------------------------------------------------------------------------------

Operator [12]

--------------------------------------------------------------------------------

And our next question will come from the line of Ritu Baral with Cowen.

--------------------------------------------------------------------------------

Subhalaxmi T. Nambi, Cowen and Company, LLC, Research Division - Research Associate [13]

--------------------------------------------------------------------------------

This is Subbu Nambi on for Ritu Baral. I have 2 questions. The first one, I was wondering if the depression data from the schizophrenia study could have a read on bipolar depression.

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [14]

--------------------------------------------------------------------------------

I'll ask Kim to take that one on, please.

--------------------------------------------------------------------------------

Kimberly E. Vanover, Intra-Cellular Therapies, Inc. - SVP of Early Stage Clinical Development & Translational Medicine [15]

--------------------------------------------------------------------------------

Thanks for the question. So the -- we do believe that the depression -- the improvement in depression that we've seen in patients with schizophrenia and comorbid depression will translate favorably to other mood disorders, including bipolar depression and major depressive disorder. We also believe the safety profile that we've seen that's been favorable in our schizophrenia program will translate favorably to mood disorders as well.

--------------------------------------------------------------------------------

Subhalaxmi T. Nambi, Cowen and Company, LLC, Research Division - Research Associate [16]

--------------------------------------------------------------------------------

I see. And my follow-up question is, are you getting a sense of the payer landscape. How is the conversation going so far for luma in schizo?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [17]

--------------------------------------------------------------------------------

I'm sorry, I don't think we could understand your question, could you say it again?

--------------------------------------------------------------------------------

Subhalaxmi T. Nambi, Cowen and Company, LLC, Research Division - Research Associate [18]

--------------------------------------------------------------------------------

Are you getting a sense of the payer landscape. How has the conversations been so far with the payers?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [19]

--------------------------------------------------------------------------------

Thanks. I'll ask Mark to answer that.

--------------------------------------------------------------------------------

Mark Neumann, Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer [20]

--------------------------------------------------------------------------------

Yes, sure. Thanks for the question. Yes, we -- across all of our customer areas with physicians and payers and patients, we're doing extensive market research and also had the opportunity, particularly with payers with medical directors and pharmacy directors in an advisory board setting to understand the current dynamics of the market to share with them the profile of lumateperone. And we've been pleased with the reaction to the profile. And our belief is that in this marketplace, there remains a significant unmet medical need for an antipsychotic that is effective but has a safe and tolerable profile. And we think that's the clinical profile that's emerging with lumateperone. And so we believe we've got a very strong clinical value proposition, and we've been engaging in an advisory setting with payers along those lines.

--------------------------------------------------------------------------------

Operator [21]

--------------------------------------------------------------------------------

And our next question will come from line of Marc Goodman, SVB Leerink.

--------------------------------------------------------------------------------

Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [22]

--------------------------------------------------------------------------------

A couple of questions. First , with respect to the numbers, can you just give us a sense of spending and how you're thinking about spending as the year progresses in R&D and G&A as much as you're willing to talk about that? Second of all, can you talk about what data you will be having in San Francisco in a few weeks? And third, with respect to the bipolar depression, there was already a question asked, but let me just ask it in a different way. Can you clarify the amount of time that was between the last patient that was enrolled in study 401 versus a study 404, so we just have a sense of timing of these things?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [23]

--------------------------------------------------------------------------------

Okay, thanks, Marc. I think we have a bunch of questions there. I'll ask Larry to talk about the numbers first, and then we'll go from there.

--------------------------------------------------------------------------------

Lawrence J. Hineline, Intra-Cellular Therapies, Inc. - Senior VP of Finance, CFO, Treasurer and Assistant Secretary [24]

--------------------------------------------------------------------------------

This is Larry. We spent approximately $35 million in the first quarter, and we expect that to increase as we go through the rest of the year as we ramp-up our precommercialization and our commercialization efforts as needed.

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [25]

--------------------------------------------------------------------------------

Then on the second question, the data in San Francisco, it will be presenting the -- our lumateperone program, including our efficacy and safety package, so the entire profile of the product. And the last question about the last patients enrolled, I -- we don't have those numbers on the top of our head, we -- but the 2 studies will be locked and data will be available simultaneously on the 2 studies later this quarter.

--------------------------------------------------------------------------------

Operator [26]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question will come the line of Robert Hazlett with BTIG.

--------------------------------------------------------------------------------

Robert Cummins Hazlett, BTIG, LLC, Research Division - MD [27]

--------------------------------------------------------------------------------

Could you give a little bit more color on the MDD indication, any specifics of the formulation that you're developing? And then I guess, is the main characteristic that you're hoping to achieve in MDD, the rapid onset? And if that's not the case, if you could describe any other characteristics that you hope to elucidate with lumateperone in that setting, that would be helpful.

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [28]

--------------------------------------------------------------------------------

Thanks for the question. I'm not really sure I understand everything about the question. So I mean on what we can say these are different formulations of lumateperone. I think since -- maybe Kim has some more understanding of your question. And yes, if you're asking if it's an injectable, it's not. It's not a long acting injectable product. And I don't know for further color, if Kim would like to add anything to that.

--------------------------------------------------------------------------------

Kimberly E. Vanover, Intra-Cellular Therapies, Inc. - SVP of Early Stage Clinical Development & Translational Medicine [29]

--------------------------------------------------------------------------------

Sure. So just as a reminder, we're very excited about the potential of lumateperone to treat depressive disorders. In particular, the pharmacology of lumateperone supports a rapid acting onset of effect with the indirect glutamate enhancement of neurotransmission through both NMDA and AMPA current downstream from the D1 receptor activation. And given the profile pharmacologically of lumateperone, we're trying to optimize a novel formulation to be able to deliver a rapid onset of effect with combining the pharmacology and the root of administration. So we have PK studies that are ongoing evaluating these, and we're excited about the opportunity, and we'll be updating you as we move forward.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

And our next question will come from the line of Matt Kaplan with Ladenburg Thalmann.

--------------------------------------------------------------------------------

Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [31]

--------------------------------------------------------------------------------

Just wanted to dig in a little bit more to your commercialization preparation. Specifically, could you give us some idea on the size of the sales organization that you plan to have in place? And as you go into September around the PDUFA date and launch the product and after the launch, after approval? And then also give us a little bit more detail in terms of the -- with the advisory committee meetings in terms of payers, with that output, what you're thinking about in terms of pricing? And I guess start with those 2, and I have some more on commercialization.

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [32]

--------------------------------------------------------------------------------

Mark?

--------------------------------------------------------------------------------

Mark Neumann, Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer [33]

--------------------------------------------------------------------------------

Yes sure, thanks for your question. I'll start with the sales force. And what I would say about our sales force preparation is, we have a very good understanding of the size of the sales force that will need to support the launch of lumateperone. We know which health care practitioners that we plan to target, we know the size of our competitors sales forces. And I guess the main message there is that we're going to size the sales force to be highly competitive in the offices of our target prescribers. As we proceed through the year and we get closer to a potential launch, we'll share more details about the configuration, but at this point, we prefer not to share that. The target prescribers that our sales force will be calling on will be those high prescribers who treat schizophrenia patients, as you can imagine. In terms of the interactions that we've had with payers and how that's informing our strategy from a pricing and contracting perspective, again, the interaction that we had has been in the market research setting sharing with, as I said, medical directors and pharmacy directors the clinical profile that's emerging with lumateperone. Getting their understanding of how they managed this category, what they see as the unmet need. And so with that, we have conducted a very comprehensive pricing strategy assessment and that indicates to us that we have a very strong value proposition with lumateperone. Obviously, as we go through the next couple of months and we prepare for launch, we will continue to monitor the clinical landscape, the policy landscape, any competitive actions. And that will all go into informing our final pricing and contracting strategies. So again, that's something that we're not sharing the details of at this point, but as we get closer to launch, we'll share more of that with you.

--------------------------------------------------------------------------------

Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [34]

--------------------------------------------------------------------------------

And I guess a follow-up on that. Do you expect the patients have to go through -- step through other medications before they get to lumateperone? What does your research show there? And then maybe another way of asking the question in terms of size of the sales force, in terms of helping us think about your cost of the launch, and what you're thinking about in terms of how we should think about that going later this year and into next year?

--------------------------------------------------------------------------------

Mark Neumann, Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer [35]

--------------------------------------------------------------------------------

Okay. So let me address the first question on the payers. And again, I think what you have to think about is the characteristic dynamic in the schizophrenia marketplace today is the idea that it's a chronic disease. These patients are frequently cycling through multiple medications because many of them, either due to inadequate efficacy or intolerable side effects discontinue at a fairly high rate. The statistic that we've seen in a clinical study is that 75% of patients starting an antipsychotic will discontinue within 18 months. So you have this dynamic where patients are frequently switching the medications, they're cycling through multiple medications. It's not unusual for a patient with schizophrenia to be on their third or fourth or fifth antipsychotic. And so what that means is that there is an ongoing need for additional treatment options. And so most payers generally cover a broad range of antipsychotics because of this switching dynamic. What they tend to do to manage the utilization is through either a tier structure, which has a differential copay or they put in place step edits and prior authorizations. So many payers will require a step through 1 or 2 generic products before providing access to the branded agent. But again, the dynamic in this marketplace is such that because patients are cycling through different lines of therapy, there is always a need for newer antipsychotics. And I think that is demonstrated by some of the success that some of the branded products -- newer branded products have had in the marketplace. So I hope that answers your question there. And would you mind just repeating the second part of your question?

--------------------------------------------------------------------------------

Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [36]

--------------------------------------------------------------------------------

Yes, that's very helpful. The second part of the question is may be, if you can give us a sense in terms of how we should think about the cost of the launch going into later this year and next year given your kind of lack of clarity at this point in terms of sharing the sales -- the size of the sales organization?

--------------------------------------------------------------------------------

Mark Neumann, Intra-Cellular Therapies, Inc. - EVP & Chief Commercial Officer [37]

--------------------------------------------------------------------------------

Yes, again, at this stage, for competitive reasons, we're not sharing the size of the sales force that we intend. I think the main message that I would communicate is we do have a good understanding of what that needs to be in order to be successful with the launch. And as we get closer to the potential approval, we'll share more of the details of that with you.

--------------------------------------------------------------------------------

Operator [38]

--------------------------------------------------------------------------------

And our next question will come from the line of Sumant Kulkarni with Canaccord.

--------------------------------------------------------------------------------

Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [39]

--------------------------------------------------------------------------------

Both of them are on 214. First on the data that represented at AAN in the poster, could you talk a little bit about the dose dependents? If you look at the plots in the poster, there seems to be a dose dependence up till the 30-mg point and then the 90 mg somehow is different? Is that -- could you help us conceptualize why that difference might be? Is it because of baseline or something else?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [40]

--------------------------------------------------------------------------------

Andy?

--------------------------------------------------------------------------------

Andrew Satlin, Intra-Cellular Therapies, Inc. - Executive VP & Chief Medical Officer [41]

--------------------------------------------------------------------------------

Yes, sure. So thanks for stopping by the poster. It was nice chatting with you there and I guess we didn't get to all the questions, so happy to discuss that a little bit further. Yes, as you could see the cohorts are relatively small, there were 8 patients in each cohort, 6 on drug and 2 on placebo. And we didn't require certain amount of baseline severity for inclusion in the trial, patients had to be mild to moderately -- had to had mild-to-moderate Parkinson's disease, but without any specific requirements for either a certain amount of motor impairment or certain amount of motor complications, including dyskinesia. So that probably accounts for a lot of the variability that we saw across the doses and I think particularly since the baseline amount of motor impairment and of dyskinesia in the 90-milligram group was less, that may account for why we saw less of an effect. The important thing is that you could see that there was trends toward greater effect, both in terms of motor impairment and in terms of treatment of dyskinesia when we got to the higher doses. And that is suggestive of the drug itself and gives us a lot of confidence going forward in terms of designing a more rigorous proof of concept Phase II trial.

--------------------------------------------------------------------------------

Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [42]

--------------------------------------------------------------------------------

Got it. And the follow-up on 214 is, are there any preliminary thoughts you can share on how dosing might be in the heart failure indication?

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [43]

--------------------------------------------------------------------------------

Yes, Andy.

--------------------------------------------------------------------------------

Andrew Satlin, Intra-Cellular Therapies, Inc. - Executive VP & Chief Medical Officer [44]

--------------------------------------------------------------------------------

Not really at this point. As I -- we mentioned we are in the second cohort studying 30 milligrams. We will be evaluating the data as we get it and determining how many cohorts we'll have in this trial and what dose will go up to and until we've been able to do that, we wouldn't be able to say.

--------------------------------------------------------------------------------

Operator [45]

--------------------------------------------------------------------------------

And I'm showing no further questions in the queue at this time. So now it is my pleasure to hand the conference over to Ms. Sharon Mates, Chief Executive officer, for any closing comments or remarks.

--------------------------------------------------------------------------------

Sharon Mates, Intra-Cellular Therapies, Inc. - Co-Founder, Chairman, CEO & President [46]

--------------------------------------------------------------------------------

Great. Thank you, and thank you, everyone, for joining the call. And stay tuned, we'll have many updates as we go forward. It's a very exciting time for us at Intra-Cellular Therapies. And with that, operator, you can disconnect the call. Thank you.

--------------------------------------------------------------------------------

Operator [47]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program, and we may all disconnect. Everybody, have a wonderful day.