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Edited Transcript of NERV earnings conference call or presentation 5-Nov-18 1:30pm GMT

Q3 2018 Minerva Neurosciences Inc Earnings Call

Cambridge Nov 5, 2018 (Thomson StreetEvents) -- Edited Transcript of Minerva Neurosciences Inc earnings conference call or presentation Monday, November 5, 2018 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Geoffrey Robin Race

Minerva Neurosciences, Inc. - Executive VP, CFO, Chief Business Officer & Company Secretary

* Rémy Luthringer

Minerva Neurosciences, Inc. - Executive Chairman & CEO

* William B. Boni

Minerva Neurosciences, Inc. - VP of IR & Corporate Communications

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Conference Call Participants

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* Biren N. Amin

Jefferies LLC, Research Division - MD and Senior Equity Research Analyst

* Jason Nicholas Butler

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Joel Lawrence Beatty

Citigroup Inc, Research Division - VP & Analyst

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Presentation

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Operator [1]

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Welcome to the Minerva Neurosciences Third Quarter 2018 Conference Call. (Operator Instructions) This call is being webcast live on the Investors section of Minerva's website at ir.minervaneurosciences.com. As a reminder, today's call is being recorded.

I would now like to turn the call over to William Boni, Vice President of Investor Relations and Corporate Communications at Minerva. Please proceed.

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William B. Boni, Minerva Neurosciences, Inc. - VP of IR & Corporate Communications [2]

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Good morning. A press release with the company's third quarter 2018 financial results 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 SEC this morning and can be found on the SEC's website at www.sec.gov.

Joining me on the call today from Minerva are Dr. Rémy Luthringer, Executive Chairman and Chief Executive Officer; Mr. Geoff Race, Executive Vice President, Chief Financial Officer and Chief Business Officer; and Mr. Rick Russell, President. 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, 2018, filed with the SEC on November 5, 2018. Any forward-looking statements made on this call speak only as of today's date, Monday, November 5, 2018 and the company disclaims any obligation to update any of these forward-looking statements to reflect events or circumstances that occur after today's call, except as required by law.

I would now like to turn the call over to Rémy Luthringer.

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [3]

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Thank you, Bill, and good morning, everyone. Thanks for joining us today. Over the past quarter, I'm pleased to report that momentum has continued to build in each of the 5 late-stage clinical trials that are underway with 3 Minerva product candidates. These trials include: A Phase III trial with roluperidone, MIN-101, for the treatment of negative symptoms in patients suffering from schizophrenia; the Phase IIb trial is MIN-117 for the treatment of major depressive disorders, MDD, associated with anxiety; and 3 Phase IIb trials with seltorexant, MIN-202, for the treatment of insomnia disorders and major depressive disorders.

Recruitment of patients into Phase III trial is ongoing with our lead product, roluperidone. We plan to enroll a total of approximately 500 patients at approximately 60 clinical sites in the U.S. and Europe.

This randomized, double-blind, parallel-group, placebo-controlled 12-week trial is designed to evaluate the efficacy and safety of 32 milligram and 64 milligram of roluperidone as monotherapy in other patients suffering from schizophrenia.

The primary endpoint of this trial is a change from baseline in negative symptoms using the Positive and Negative Syndrome Scale, PANSS, Marder's negative symptoms factor score, NSFS, over the 12-week double-blind treatment period.

After the 12 weeks, patients enter into a 40-week open-label extension period, during which those on active drug during the double-blind phase continue to receive the original dose, while patients on placebo are randomized to receive either 32 milligram or 64 milligram of active drug if they elect to enter the extension period.

Key secondary endpoints includes a Personal and Social Performance scale, PSP, and Clinical Global Impression of Severity, CGI-S. This trial is addressing the significant unmet medical need, negative symptoms for which no treatments are approved.

As we stated in this morning's press release, momentum continues to build in the enrollment of patients in our Phase III clinical trial with roluperidone. We're nearing our target number of clinical sites, including surgeon sites initiated following the decision by 2 Eastern European countries not to participate in this trial. We expect the completion of enrollment during the first half of 2019 and top line results in mid-2019.

We're also moving forward on preparatory work for the filing of a new drug application, NDA, for roluperidone in anticipation of a positive Phase III study and on the launch strategy of this molecule.

Moving to MIN-117. We're enrolling patients in the Phase IIb trial, which is compound in MDD patients with anxiety symptoms. These patients must have a diagnosis of MDD without psychotic features and with at least moderate levels of anxiety. Based on the pharmacological profile of the molecule shown in an earlier clinical testing, we believe that this type of patient may benefit particularly from treatment with MIN-117.

The study design includes a screening phase, a 6-week double-blind treatment phase and a 2-week post-study follow-up period. We plan to enroll approximately 324 patients in the U.S. and Europe. The primary objective of this trial is to evaluate the efficacy of MIN-117 compared with placebo in reducing the symptoms of depressed mood as measured by the change from baseline in the Montgomery-Asberg Depression Rating Scale, MADRS, total score over a 6-week treatment period.

Secondary objectives include: first, assessment of the change from baseline in symptoms of anxiety using the Hamilton Anxiety Scale, HAM-A; second, the change in severity of illness using the Clinical Global Impression of Severity Scale, CGI-S and Clinical Global Impression of Improvement Scale, CGI-I; and third, safety over 6 weeks of treatment.

In addition to these measurements, we also plan to assess cognition, sexual function, sleep and onset of action in terms of mood improvement. The top line data readout from this trial is anticipated in the first half of 2019.

Three Phase IIb trials are ongoing with our third late clinical-stage product, seltorexant, also known as MIN-202. Seltorexant is under co-development with the Janssen Pharmaceutica. Both these trials are in major depressive disorder and one is in insomnia disorder.

In the first MDD trial, approximately 280 patients are planned to be enrolled in the U.S., Europe, Russia and Japan. This trial includes a 4-week screening period, a 6-weeks double-blind treatment period and a 2-week follow-up period. So primary objective is a change from baseline to week 6 in the Montgomery-Asberg Depression Rating Scale.

In the second MDD trial, approximately 100 patients are planned to be randomized at about 34 clinical sites in the U.S. This trial includes a 4-week screening period, a 6-months double-blind treatment period and a 2-week follow-up period.

The primary objective is to assess the efficacy of seltorexant or quetiapine, which is a reference treatment as adjunctive therapy to an antidepressant drug in delaying time to all cause discontinuation of study drug.

The insomnia trial is expected to enroll a total of approximately 360 patients at clinical sites in the U.S., Europe and Japan. This trial will have a duration period of up to 61 days, including screening and follow-up. The primary objective is to assess the dose response of 3 doses of seltorexant compared to placebo on sleep onset as measured by latency to persist in sleep, LPS, using polysomnography, PSG. All of these trials are on track for completion in 2019.

The main focus of Minerva's team is the effective execution of our ongoing clinical trials, so we can generate the highest quality of data. Importantly, we believe each of our product candidates has the potential to be highly differentiated from current approved therapies in their respective target indications.

I would now like to turn it over to Geoff who will describe our financials.

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Geoffrey Robin Race, Minerva Neurosciences, Inc. - Executive VP, CFO, Chief Business Officer & Company Secretary [4]

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Thank you, Rémy. Earlier this morning, we issued a press release summarizing our operating results for the third quarter ended September 30, 2018. 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, restricted cash and marketable securities as of September 30, 2018 were approximately $97.7 million. We believe that the company's existing cash, cash equivalents, restricted cash and marketable securities will be sufficient to meet its cash commitments for at least the next 12 months from today and into mid-2020.

Research and development expenses for the 3 and 9 months ended September 30, 2018 were $8.4 million and $25.9 million, respectively, compared to $9 million and $23.7 million for the same periods in 2017. This variance in R&D expenses was due to lower development expenses for the seltorexant program due to the amendments to our co-development and license agreement with Janssen, which was partially offset by higher development expenses for the Phase III clinical trial of roluperidone and the Phase IIb clinical trial of MIN-117.

We expect R&D expenses to increase during 2018 in connection with increased patient enrollment and related support activities for the roluperidone and MIN-117 clinical trials.

General and administrative expenses for the 3 and 9 months ended September 30, 2018 were $4.1 million and $12.2 million,, respectively, compared to $2.5 million and $7.9 million for the same periods in 2017. This increase in G&A expenses was primarily due to an increase in noncash stock-based compensation expenses and salary costs from increased staffing to support precommercial activities. We expect G&A expenses to increase during 2018 as the company begins to invest in the infrastructure necessary to support its growth.

The company reported a net loss for the 3 or 9 months ended September 30, 2018 of $12 million and $37 million, respectively, or $0.31 and $0.95 per share, respectively, compared to $11.3 million and $31.7 million, respectively, or $0.28 and $0.84 per share, respectively, for the same period in 2017.

During the third quarter, the company also made final repayments on term loans with Oxford Finance LLC and Silicon Valley Bank. All outstanding debt under the company's working capital agreements with these organization has been repaid in accordance with the loan terms.

Now I'd like to turn the call back to the operator for any questions.

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Questions and Answers

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Operator [1]

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

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [2]

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First, couple on roluperidone. Can you give us any additional color into the 2 countries you said have declined to participate in the Phase III trial? And then I know you haven't completed enrollment period, but just on an ongoing basis, what percentage of eligible patients are enrolling into the open-label extension study?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [3]

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This is Rémy speaking. So I can give you obviously additional color, yes. So 2 countries indeed in Eastern Europe have declined to participate to the study. So what I can tell you, I can obviously not give you all the interactions with the health authorities, but what I can tell you is that the reason which is why they have not participated is not at all related to the molecule or to any safety issues. And I have to say that it is a little bit misleading here, while it's questionable because in one of this country has participated in the -- into Phase IIb trial and obviously, it was one of the countries having a very nice recruitment there. And to be very clear, we received also from the 2 countries an approval from the health authorities and at the end of the day, it has been declined by a central governmental body. So this is why we have anticipated and we have added additional sites and additional countries in order to anticipate this decline of this 2 countries. Now concerning the number of patients going into the extension, as you know, this is optional, and the patients have to decide if they want to enter the extension, obviously, with a discussion with the PIs and with the caregiver. But so what I can tell you is that I mean, in the Phase IIb, and it is really a copy paste of the Phase IIb, we had quite a significant number of patients entering into this extension. Once they completed the 12-week double-blind phase, it was at around 80% of patients who entered into the extension. And most of the reasons why patients did not enter was really practical reasons like, for example, patients who wanted to be with their family, who had, I have to say, some vacations. So clearly, a lot of patients have decided to enter the study and I hope it will be exactly the same as the Phase III.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [4]

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Okay, great. Very helpful. And then just a quick follow-up. MIN-301, can you just walk us through what the remaining steps are here in terms of preclinical studies in preparation for the IND submission?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [5]

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So we're, obviously, working on the IND-enabling studies as a preclinical package, regulatory package to bring this molecule in domain. We're currently working on all the tox studies, including long-term tox because, as you know, this molecule has a disease-modifying potential. So you really need to be able to give this molecule long enough in order to see the effects. We're also working on, I have to say, finalizing a very robust with a limit of quantification, which is very low in terms of (inaudible) because interesting enough, I mean, MIN-301 is working at extremely low concentrations. So all this efforts are going on. And in parallel, we're also working on better understanding the mechanism of action of the molecule. And we're also testing based on preclinical models, the full potential of this molecule because basically, I think it's really a molecule, which is, I have to say, adaptive for all the neurodegenerative disorders. Also, we have started with Parkinson's disease. So we're really very extensively working on this in order to have the package ready to go domain.

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Operator [6]

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And our next question comes from Joel Beatty with Citi.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP & Analyst [7]

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It looks like the trial of MIN-117 will be the first of the trials to read out next year. Could you discuss a little bit about the -- what's unique about the mechanism of action there compared to other agents that are used to treat major depressive disorder? And what end points in that trial will help tease out any unique aspects of that agent?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [8]

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So this is a great question, Joel, yes. And I think really I mean this molecule is a molecule, which is really able to address definitely partial responses on this. And the good news is obviously that it's obviously a draft guideline from the FDA, but I mean the FDA wants really to have molecules, which given in monotherapy are really addressing the different types of depression, also subtypes of depression among the MDD. So why this molecule can address this type of patients who are not really responding or not responding at all to adjunctive therapy is that this molecule is working definitely via the monoaminergic pathways, serotonin and dopamine. But what is specific in terms of serotonin, it is not only inhibiting the reuptake of serotonin, but it has also an effect on the 5-HT1A autoreceptor, which is located presynaptically and this is definitely known to have an effect in terms of reducing the onset of reversal of mood and the other aspect I already mentioned is that this molecule is also having an effect on dopamine, and in other words, it is increasing the availability of dopamine into synaptic cleft. So all this together is really giving a profile to this molecule, which is completely unique, and this molecule is extremely well tolerated because, I mean, we are not having an effect on -- a direct effect on noradrenaline, which, as you know, has some impact in terms of heart rate, blood pressure and so on. So this is the uniqueness of this molecule, and all the preclinical models we have tested are really indicating that this is the case, and the Phase IIa was also very promising because, if you remember, we had only in the 2.5-milligram group of our molecule, people who really completely responded and recovered completely from their depressive episode, whereas with a reference molecule, it was not the case. So this is really what we're aiming to do. In this phase IIb study, the objective is definitely to confirm that the molecule is showing again the same effect in a larger sample size. We're more specifically now also checking the aspect of anxiety because we had an extremely good signal in terms of anxiety and this is obviously important because it might avoid to comedicate patients with benzodiazepines, for example. And afterwards, we're focusing also where we had very clear signals in the Phase IIa, which is cognition, sexual function or absence of effective sexual function and also the absence of this molecule in terms of effect on sleep, we have not the classical effect on REM sleep you might see with this -- most or all antidepressants working via the monoaminergic pathway. So this is what makes the molecule specific. And lastly, but not the least, to be so long, we did also some models -- preclinical models looking to anhedonia and definitely, we have a very, very nice reversal in terms of anhedonia. And this is usually the reason why the patients are not responding completely to existing therapies. So long story short, I think this is what makes this molecule unique.

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Operator [9]

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(Operator Instructions) Our next question comes from Biren Amin with Jefferies.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [10]

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Maybe I can just start with roluperidone, Remy. I think you mentioned 2 countries in Eastern Europe are no longer going to participate. How many patients in the Phase III were enrolled in sites in those 2 countries? And how you plan on handling patient data from those 2 countries?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [11]

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So great question, Biren. So to be more precise, I mean, one of the country is Russia. And Russia participated with around 5 sites in the previous trial. And so the Russia brought around 20, 30 patients, it's top of my head, I mean don't blame me if the numbers are not completely correct, but this is the number more or less of patients which have been recruited in Russia. So this is what is the impact. So what we have done already, this was just to -- for good practice. I mean when we initiated or when we submitted to the different countries participating to the study, we had some backup sites. This does not mean that sites are not good or whatever, these are just sites who can compensate if you want to -- one site is not really recruiting well or you want really to get one site replaced by another site. So obviously, we've activated these sites immediately. And indeed, we have added 2 additional countries. We already have selected but we did not activate as well. So this is what we have done in order to compensate. I've responded to your questions completely, but please go ahead.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [12]

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And were there any patients that were in the treatment period that had to be discontinued when the countries made the decision? And if so, how you're going to handle those clinical data once they're analyzed in those patients?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [13]

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Not on -- clearly, I mean, we have not started anything in these countries just because this was in the face of getting the approval for the studies, there was no patient who has been treated in this country. So there is nothing to stop or to do in these countries because these 2 countries have just not started yet. So clearly, nothing to worry about this one.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [14]

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Got it. And then, just on the Phase III in general, have you been able to look at the baseline characteristics of patients that have enrolled in the Phase III? And can you tell us anything about in terms of how it compares to the Phase II baseline characteristics?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [15]

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Yes, absolutely. As you know, we are following this very carefully, as you know, and we had long discussions around this the way we're doing this. So definitely, we're doing this and I always -- as you know, we've added United States, and I wanted really to make sure that the things are really similar. And I have to say that the baseline characteristics of the patients whatever is the country, including U.S., are very similar between the Phase III and the Phase IIb. So for the moment, I'm more than confident that we are catching exactly the same patients, we have exactly the same quality because we also blind it. We are following how the PANSS score is evolving over time to pick up sites where maybe the scoring is deviating in order to bring them back. So all these controls we have implemented are definitely telling us that we are dealing with exactly the same patient population and this is exactly the same quality in terms of scoring the symptoms. So for the moment, I'm extremely, extremely, extremely encouraged and positive with what we see. And as you know, this is what we continue to do all along the study. So clearly, very, very encouraging.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [16]

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Got it. And maybe just one last question from me. You're running a number of trials in major depression. And we've had FDA Advisory Committee last week to look at therapies in depression. Any key takeaways that you took away from the FDA Advisory Committee last week?

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [17]

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So I don't know which one you're referring to because there are obviously 2 molecules, which are not the same.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [18]

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The Alchemy's ALK5461.

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [19]

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Okay. So I was guessing that you were asking this question. So I think what -- it comes back exactly to what I said before. I said the FDA now wants definitely to see very clear data in terms of monotherapy before you go with add-on. And it seems this is a take home I take, and I think that what we're doing here, I mean, to go with the Phase IIb, which is a very well-powered study, where we have 2 doses versus placebo, where we have the right scales and the right duration -- treatment duration, excuse me, I think this is the way to go in order to be convincing and to design the right Phase III. So this is my take-home message, is that you have to first demonstrate that you've really an antidepressant in your hands in monotherapy. Afterwards, I mean, the mechanism of action to the Alchemy molecule is another topic, but I do not want to comment on this topic because this is not really what I would like to do because I would like to focus on our molecule.

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Operator [20]

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

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Rémy Luthringer, Minerva Neurosciences, Inc. - Executive Chairman & CEO [21]

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Yes. So thank you really everybody for taking part to this call, and thank you also for this great questions, and we're really looking forward to update you moving forward and to give you feedback about this 5 exciting clinical trials currently going on. Thank you so much, and have a nice day.

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Operator [22]

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