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Minerva Neurosciences, Inc. (NERV) Q1 2019 Earnings Call Transcript

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Minerva Neurosciences, Inc. (NASDAQ: NERV)
Q1 2019 Earnings Call
May 6, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Minerva Neurosciences first-quarter 2019 conference call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session following today's prepared remarks. 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.

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

Good morning. A press release with the company's first-quarter 2019 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 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, Mr. Rick Russell, President, and Mr. Geoff Race, Executive Vice President, Chief Financial Officer, and Chief Business Officer. Following our prepared remarks, we will open the call for Q&A.

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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 March 31st, 2019, filed with the SEC on May 6th, 2019. Any forward-looking statements made on this call speak only as of today's date, Monday, May 6th, 2019, 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 today. Minerva has five late-state clinical efficacy trials ongoing with three product candidates. This includes a Phase 3 trial with roluperidone, MIN-101, for the treatment of negative symptoms in patients with a diagnosis of schizophrenia, a Phase 2b trial with MIN-117 in patients suffering from major depressive disorder, MDD, with associated anxiety, and three Phase 2b trials with seltorexant, MIN-202, for insomnia disorder and MDD.

On today's call, I am going to give an update on progress in each of our programs, beginning with roluperidone. Roluperidone is potentially the first treatment for the negative symptoms of schizophrenia. I am pleased to report that we are currently well advanced in our Phase 3 study. As I have explained in the past, special care needs to be taken in the conduct of late-state clinical trials in psychiatric disorders. This includes careful selection of patients and the engagement of extremely well-trained clinical investigators to evaluate the therapeutic benefits of psychotropic drugs. These factors are especially critical when evaluating the effect of the drug on negative symptoms in patients suffering from schizophrenia, primarily because of the need to have a complete understanding of patient history and the time course of the negative symptoms.

Since the start of the trial, we have applied extremely stringent entry criteria. Recently, we have seen more screening failures than expected, which on one hand demonstrates the ongoing quality of protocol compliance by our clinical sites, but on the other hand has had an impact on expected recruitment. In addition, we are now experiencing increased competition for recruitment of schizophrenic patients in those countries where we are currently conducting our study. Because of these factors, we now expect completion of enrollment to take place during the second half of 2019. Top-line results from the 12-week double blind portion of the trial are therefore expected to be available in the fourth quarter of 2019.

Also, we have revised our timelines, and I am pleased to report that patient selection today has been good, and the investigators we have selected in both the U.S. and Europe are performing very well. We recently completed the opening of additional sites in Moldova, Georgia, and Ukraine, and today, I am pleased to report that 61 sites are participating in our trial and applying the highest standards of quality and expertise.

Briefly, to remind participants on the call, this trial will enroll 501 patients in the U.S. and Europe. Patients are being randomized into two active treatment groups: 32 and 65 mg of roluperidone and placebo. The primary endpoint is a change from baseline negative symptoms using the Positive and Negative Syndrome Scale, PANSS, Marder's negative symptom factor score, NSFS, over the 12-week double blind treatment period.

This 12-week treatment period is followed by a 40-week open-label extension period during which patients on drug during the double-blind phase will continue receiving the original dose. Patients on placebo will be randomized to receive either 32 mg or 64 mg of active drug. In parallel to conducting our Phase 3 clinical study, we continue preparatory work for regulatory filing and commercialization, including clinical pharmacology studies and manufacturing registration batches. Later in this call, Rick Russel, Minerva's President, will give details of our commercial preparation activities currently ongoing for roluperidone.

MIN-117 is another potential treatment for patients suffering with MDD and associated anxiety disorders as a monotherapy. To the best of our knowledge, there is no effective monotherapy treatment addressing the unmet need among this group of patients, and physicians are often obliged to prescribe concomitant medication, such as benzodiazepines, to manage patients' anxiety symptoms. Although a good number of patients with MDD also have associated anxiety disorders, recruiting anxio-depressive patients sets a higher bar for recruitment rates compared to recruiting patients with MDD only.

In the ongoing Phase 2b MIN-117 trial, completion of enrollment of approximately 324 patients at clinical sites in the U.S. and Europe is now expected in the third quarter of 2019, with top-line results expected to be available in the first quarter of 2019. Briefly, the primary objective of the Phase 2b trial is to evaluate the efficacy of two fixed doses of MIN-117, 5 mg and 2.5 mg, compared with placebo in reducing the symptoms of depressed mood as measured by the change in the Montgomery-Asberg depression rating scale MADRS total score over a six-week treatment period.

Secondary objectives include first, assessment of the change from baseline in symptoms of anxiety using the Hamilton anxiety scale HMA, second, the change in severity of illness using the clinical global impression of severity scale CGIS and clinical global impression of improvement scale CGII, and third, safety over six weeks of treatment. Approximately 324 patients are expected to be enrolled in this trial at around 40 sites in the U.S. and Europe.

Seltorexant, also known as MIN-202, is our third late-stage clinical product under development with Janssen for both the treatment of insomnia disorder and the adjunctive treatment of MDD. Seltorexant is a specific orexin-2 antagonist, and as such, represents a totally innovative mechanism of action to treat both insomnia and MDD. MDD is a chronic condition which patients can suffer over long periods of their lifetime. Currently available treatments help lead to full recovery in some, but others will suffer chronically from residual symptoms.

Today, we take care of these residual symptoms by prescribing low doses of antipsychotics. This therapeutic strategy has helped some patients, but unfortunately also induces known side effects of antipsychotics such as weight gain, sedation, and motor impairments. For these reasons, we believe there is an urgent need for an effective treatment with good efficacy and an improved long-term side effect profile. Previous clinical data generated with seltorexant suggests that we can meet both of these objectives in our Phase 2b program.

Three Phase 2b clinical trials with seltorexant were initiated in late 2017 to expand upon earlier positive clinical data in both indications. Two of these trials are in MDD, and one is in insomnia disorder. We have made significant progress in all three trials, and today, we are pleased to report that all three studies will read out earlier than previously expected. In the first MDD trial, designated as the 2001 trial, patient enrollment has been completed, with 287 patients enrolled at clinical sites in the U.S., Europe, and Japan. I am pleased to announce that top-line results from this trial are expected in the second quarter of 2019. Enrollment has also been completed in the insomnia trial, designated as the 2005 trial, with approximately 360 patients enrolled at clinical sites in the U.S, Europe, and Japan. Top-line results from this trial are also expected in the second quarter of 2019.

Finally, in the second MDD trial, designated as the 2002 trial, patient enrollment has also been completed, with 100 patients enrolled at clinical sites in the U.S. Top-line results from this six-month trial are expected to be available in the third quarter of 2019. I look forward to updating you on these important studies in the near future. I would now like to turn the call over to Rick, who will summarize ongoing commercial preparation activities with roluperidone.

Rick Russell -- President

Thank you, Remy. I'll provide a brief update on several key activities related to our plans to commercialize roluperidone, if approved by the FDA, for the treatment of negative symptoms of schizophrenia. We plan to file our trade name application with the agency in the second quarter, and additionally, we're on track to finalize our supply agreements for the U.S. market by midyear. We recently recruited a senior commercial leader and retained appropriate third-party vendor partners to finalize our launch plans in order to be prepared to fully capitalize on the significant opportunity for roluperidone if and when we are successful in gaining appropriate regulatory approval.

We've initiated payer research to assist in defining the value proposition and our access strategy, and we've also retained a medical payers partner to assist us with strategy and planning in this important area. As mentioned previously, we believe the unmet need for effective treatments for negative symptoms in schizophrenia represents a substantial commercial opportunity. Roluperidone, if and when approved by the FDA, could potentially help patients and caregivers who suffer from the impact of this debilitating condition. With that, I'd like to turn it over to Geoff.

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

Thank you, Rick. Earlier this morning, we issued a press release summarizing our operating results for the first quarter, ended March 31st, 2019. A more detailed description 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 March 31st, 2019 were approximately $79.3 million. The company believes that its 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 early 2021 based on our current operating plan. The assumptions upon which this estimate is based are routinely evaluated and may be subject to change.

Research and development expenses were $11.6 million in the first quarter of 2019 compared to $8.4 million in the first quarter of 2018. The increase in R&D expenses primarily reflect higher development expenses for the Phase 3 clinical trial of roluperidone and the Phase 2b clinical trial of MIN-117. We expect research and development expenses to increase during 2019 as we continue patient enrollment and related support activities for the roluperidone and MIN-117 trials.

General and administrative expenses were $4.7 million in the first quarter of 2019 compared to $4.3 million in the first quarter of 2018. 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 our pre-commercial activities. Net loss was $15.8 million for the first quarter of 2019, or a loss per share of $0.41 basic and diluted, compared to a net loss of $12.4 million for the first quarter of 2018, or a loss per share of $0.32 basic and diluted. Now, I'd like to turn the call back to the operator for any questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen on the phone lines, if you'd like to ask a question at this time, you may press *1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, you may press #. And, our first question comes from Jason Butler of JMP Securities. Your line is now open.

Roy Buchanan -- JMP Securities -- Vice President

Hi, it's Roy in for Jason. Thanks for taking our questions. I had a couple on the timeline delays. I guess for the roluperidone Phase 3 screening failures, you mentioned seeing more failures recently. Have you guys changed any of the screening criteria? Is it possibly due to opening sites in new geographies? Is it just randomness? And then, you mentioned greater competition for schizophrenia patients. Are you seeing competition specifically for those with negative symptoms, or is it just more broadly schizophrenia patients? Thanks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Thank you so much, Roy, for your questions. So, I think the screening failures is very [inaudible], and it is true that since a few weeks, we have more screen failures, but again, this shows really that the eligibility criteria are extremely strict, and I think also, it is a very encouraging point because the PIs and the teams at the clinical sites are definitely doing their job and trying to bring in the right patients, and as I mentioned during my talk, it's very important -- it's most important for trial with negative symptoms to have this very, very good knowledge about history and stability of negative symptoms. I think this is really the key of success.

So, to your second point, is the screen failure related to additional sites which have been added, I think again, you cannot find any logic with the new sites compared to the existing sites, so it's definitely spread all over the different sites, and obviously, we have -- since the beginning -- a little bit more screen failure in the U.S. as compared to Europe, but definitely, it is not related to the new sites which have been opened. What we are doing, to be very clear, is each site is retrained before it starts to work, and that means the recently opened sites have obviously been retrained when they started the screen, and even we are assisting them in the way that we are available when they have -- they screen the first patient in order to really bring them on speed if they have any questions.

Now, concerning the competition, I really think it is competition concerning schizophrenia overall. It's definitely not related to negative symptom trials. Also, as you know, there is a trial run by Acadia as a knockdown study for antipsychotics, and recently, for example, Lundbeck announced that they will start a trial, but I was more referring to the overall activity in the space of schizophrenia where the biggest efforts, I think, are going to more safety, improved treatments for positive symptoms. Clearly, our drug is a leading drug, and by having basically a lot of sites recently, our drug is really the drug which is in the mind of the people doing the trial.

Roy Buchanan -- JMP Securities -- Vice President

Okay, great. That's very helpful. And then, can you just remind us what the decision-making process in timing between yourselves and J&J are this quarter based on the results of the trials we expect, and what milestones depend on those? Thanks.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Can you repeat the first part? Sorry, I didn't understand.

Roy Buchanan -- JMP Securities -- Vice President

Just the timing and the gating events between yourselves and J&J regarding the seltorexant trials.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

I will answer the timing, and for the gating events, I will give over to Geoff. So, I think for the timing, these two studies -- we will have the data before or during the second quarter of 2019. We have extremely well recruited, and we really could see very good recruitment all over the duration of the recruitment time, and indeed, that means the databases have been locked, and the data currently analyzed, so I think you have to stay with us some additional days or weeks in order to make sure that things are completely analyzed, that we can really give the complete top-line results we want to give over, but things are really going extremely well here, and we are in the process of analyzing the data. For the third study, this is a six-month study, so obviously, it takes a little bit longer, so the study is recruited -- it takes a little bit longer to come up with the top-line results, but again, the study is completely recruited.

So, this is extremely good data, as you know. Some trials are taking a little bit longer. Other trials are going a little bit faster. Again, I think what is very important is to stay with the right number of sites. Too many sites is bringing a lot of noise into your data to keep the investigators very motivated, which is definitely the case. I can tell you that I have been the last week in Ukraine; I have been two weeks ago in Bulgaria. They are extremely motivated to continue this trial and to provide the best quality. So, this is where we are. Geoff, maybe you can take the second part of the questions.

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

Sure. I think the question was are there any milestones associated with the completion of this study. The answer is no, there are no clinical linked milestones. And, to go back to the previous point of gating issues, as Remy said, there are currently no gating issues. The trials are fully enrolled, and data is being analyzed, and we'll publish that when it's available.

Roy Buchanan -- JMP Securities -- Vice President

Okay. So, there's a decision point four $40 million on proceeding to Phase 3. Do you expect that second half? Is that fair to say?

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

I think it's difficult to respond to that question at the moment. We would like to obviously complete our review of all of the data before we decide on next steps, which of course is the decision point four that you're referring to, and I think it's not possible to give any guidance in terms of when that may occur.

Roy Buchanan -- JMP Securities -- Vice President

Okay, fair enough. Thank you.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

If you'll allow me just to add, as Geoff said, we need to have all the data in hand, and we need to have the data really from the three trials, so I think really, we need to wait a little bit for the decision.

Roy Buchanan -- JMP Securities -- Vice President

Understood. Thank you.

Operator

Thank you. And, once again, ladies and gentlemen, if you'd like to ask a question at this time, you may press *1. And, our next question comes from Joel Beatty of Citi. Your line is now open.

Joel Beatty -- Citigroup -- Analyst

Hi. Good morning, and thanks for taking the questions. The first one is on the seltorexant depression study reading out this quarter. Can you tell us -- beyond the primary endpoint, what secondary endpoints will be important to consider to get a sense of how differentiated the agent is compared to other agents used for depression?

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Joel, this is a great question. So, definitely, obviously, we try to -- the primary endpoint is very clear. It is to show that overall, these patients are responding extremely well to SSRI or SMRI to improve their mood and to be seeing improvement on the depression scale. So, the secondary endpoint is quite interesting and quite important, and I think it's a little bit related, if you'll allow me, to the previous question. As you know, in this trial, we have the possibility to split the patient population included in the trial into patients with insomnia complaints and patients without insomnia complaints, so clearly, this secondary endpoint will be extremely important to understand what is the link between the direct effect we have seen of the molecule on mood and what is the added value or inference of insomnia on the result.

Now, in terms of how it is differentiated -- so, first of all, I think it is differentiated -- and, if I can speak even if the data are blinded from me, moving on the recruitment, it's a complete study. We could really see that this molecule is extremely well tolerated, and compared to existing therapy strategies in order to bring back to normalcy a patient who is not responding well to existing therapies. What they're usually using is antipsychotics, and with all the side effects you can think about it. First of all, safety is extremely important.

Second, the mechanism of action is extremely unique because here, as I think I explained in one of the previous calls, we are really trying to modulate somehow all the consequences of being depressed. So, in other words, the stress hormones are regulated or are normalized as the autonomic nervous system is normalized or modulated with a molecule like ours, and to the best of my knowledge, we have no other molecule which is really working in this way. So, if the data are positive when we will have the data, this will be a complete game-changer in the way you can think about treating a patient.

And obviously, last but not least, as you know, depressed patients -- usually, when they are coming to see first time the treating physician, they have complaints about sleep disorders. I'm not saying that sleep is the only driver for depression, but it is this kind of warning symptom in order to have the clinicians asking themselves if they face depression or purely a sleep disorder. So, they gain by having a drug have a positive effect in terms of sleep, not only in terms of insomnia, but also in preserving the sleep physiology. Preserving deep sleep, for example, is extremely important. So, all this data will be extremely important moving forward, obviously, but are definitely giving a specific unique profile to our molecule.

Joel Beatty -- Citigroup -- Analyst

Ver good. And, another question -- could you provide any thoughts on how expensive it may change over the course of the year, or if they've been relatively consistent, I guess with the idea that you have a few trials wrapping up around the middle of the year, what were those trials -- and, I know the seltorexant [inaudible] you're trying to develop with Janssen.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

So, obviously, it's difficult to predict, but Geoff, please jump in if you want to give more color. But, it is true that to run all these trials is quite expensive, and moving forward, it will come a time where, as we already discussed, we will have to analyze the data, we will have to design the Phase 3 program, and here, in terms of clinical study costs, things will definitely go probably a little bit down, but on the other hand, as I've already mentioned, we are really working to complete the complete package for roluperidone, and we are currently running some drug interaction studies, and we are completing the clin pharm package, and obviously, there's a lot of C&C work going on. So, all in all, I have not a good answer to give you, but I think the costs moving forward will be kept under control, as we always have done, but being able nevertheless to achieve all what you want to achieve, but I don't know if Geoff wants to add something to what I'm saying here.

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

Just 10 seconds. Joel, thank you very much for the question. Obviously, we started this year with $88 million in cash. Burn rate will be slightly down on last year. Obviously, the first half of this year, we're running multiple studies, but we'll see those trail off toward the end of the year. Obviously, the nine-month extension period will continue to run in the roluperidone study, but probably similar burn rate to last year and next year. That will fall slightly. I guided in the earnings call earlier to cash runway taking us to early '21, and basically, the assumptions that underpin that current forecast.

Joel Beatty -- Citigroup -- Analyst

Great. And, maybe one last question on the timing for roluperidone. I've seen the most recent slide deck guiding toward a launch in 2021 or 2022, but that was before the delay that was announced today. Does the delay announced today in enrollment affect the potential launch timing for 2021 or 2022? Could you also talk about maybe what the important factors are that affect whether the potential launch could happen in 2021 or 2022?

Remy Luthringer -- Executive Chairman and Chief Executive Officer

So, I can take this question, Joel. I don't think that this has any impact on the timing for a very simple reason. First of all, we are extremely well advanced with our NDA preparation that we had really integrated some buffer here because I think this is what you have to do. And, in terms of C&C, in terms of scale-up, in terms of preparation of launch, the things are going extremely smoothly, so definitely no impact on the 2021-22 timelines, but I don't know. Rick, do you want to add something about what you are doing currently in terms of being ready?

Rick Russell -- President

Yeah, we'll definitely be ready to launch very soon after approval, and I think really, when you look at that timeline that we've previously communicated, really the biggest swing factor between the end of '21 and early '22 is how long it takes for the agency to complete their review of the file, but we will be ready to go commercially upon approval.

Joel Beatty -- Citigroup -- Analyst

Very good. Thanks, guys.

Operator

Thank you. And, that concludes our question and answer session for today. I'd like to turn the conference back over to Dr. Remy Luthringer for closing comments.

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Thank you all for your participation in today's call. I'm really looking forward to update you very soon about the progress of all the products we are currently developing for unmet medical needs in patients suffering from psychotic disorders. Thank you again, and have a nice day. Bye-bye.

Operator

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

Duration: 33 minutes

Call participants:

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

Remy Luthringer -- Executive Chairman and Chief Executive Officer

Rick Russell -- President

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

Roy Buchanan -- JMP Securities -- Vice President

Joel Beatty -- Citigroup -- Analyst

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