Minerva Neurosciences, Inc. (NERV) Q4 2015 Earnings Report, Transcript and Summary

Welcome to the Minerva Neurosciences Year-End 2015 Conference Call. [Operator Instructions]. I would now like to turn the call over to William Boni, Vice President of Investor Relations and Corporate Communications at Minerva. Please proceed.

Good morning. A press release with the Company's fourth quarter and year-end 2015 financial results became available at 7.30 AM Eastern Time today and can be found on the Investors section of our website. Our annual report on Form 10-K was also filed electronically with the SEC this morning and can be found on the SEC's Internet website at www.sec.gov. Joining me on the call today from Minerva are Dr. Remy Luthringer, President and Chief Executive Officer, and Mr. Geoff Race, Executive Vice President and Chief Financial Officer and Chief Business Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind you that today's discussion will include statements about the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. These forward-looking statements are based on our current expectations and may differ materially from actual results due to a variety of factors including without limitation whether any of our therapeutic products will advance further in the clinical trials process; whether, when and to what extent results from such trials will be available and whether and when if at all such products will receive final approval from the U.S. Food and Drug Administration or equivalent foreign regulatory agencies, and for which indications whether any of our therapeutic products will be successfully marketed if approved; whether any of our therapeutic product discovery and development efforts will be successful; our ability to achieve the results contemplated by our co-development agreements; management's ability to successfully achieve its goals; our ability to raise additional capital to fund our operations on terms acceptable to us; the sufficiency of our current cash position to fund our operations and general economic conditions. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption 'Risk Factors' in our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on March 14, 2016. Any forward-looking statements made on this call speak only as of today's date, Monday, March 14, 2016 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.

Thank you, Bill and Good morning everyone. Thank you for joining us today. 2015 was a year of successful pinnacle trial execution for Minerva. I'm pleased to report patient recruitment screening and enrollment proceeding on a timely basis in four clinical trials with three components during this year. As a result we’re in a position to announce data from this trial in the first half of this year. In fact we already have obtained positive results with our announcement in January of positive top-line data with MIN-202, this data relate to our Phase 2a trial in patient suffering from primary insomnia disorder without any associated [indiscernible] disorder. Today we’re pleased to summarize additional positive data with MIN-202 in our trial carried out in patient suffering from a major depressive episode and having a diagnosis of major depressive disorder or MDD. I will review details from both of these important read outs later in this call. In addition to the main Q4 results we anticipate two read outs in the second quarter of this year and in our Phase 2b trial in patients suffering from schizophrenia and from our Phase 2a trial MIN-117 in patients affected by MDD. Our goal at Minerva is to address unmet medical needs to help patients suffering from severe disorders. The aim to accomplish this by developing drugs is comes a limitation of available of therapies. Minerva is driven by data generation which will inform our decisions around future development, 2016 will be a key year in this regard. Let me now address our clinical trials in more detail beginning with MIN-101. In late 2015 we completed the enrollment of a total of 244 patients in a randomized placebo controlled double-blind parallel group design Phase 2b trial of MIN-101 to treat unmet needs in patients suffering from schizophrenia. The study includes two parts, the core study which is a double-blind treatment period of the trial is carried over a 12 week treatment duration. Following this period patients have the opportunity to enter into an extension period of six months. During the extension all patients receive either 32 or 64 milligram of MIN-101. Patients who received placebo in the core study are randomized to one of these two doses. The primary objective of this trial is to evaluate the efficacy of the two doses of MIN-101 32 milligram and 64 milligram administrated in the morning compared to placebo in improving negative symptoms. Secondary objectives includes the assessment of commission, [indiscernible] and the overall spectrum of symptoms of the disease. Top line results from the core study are expected in the second quarter of 2016. We announced in Late December 2015 that the U.S. Food and Drug Administration accepted the company's investigational new drug IND application for MIN-101. FDA acceptance of our IND for MIN-101 is an important step towards initiation of clinical testing of our compound in the U.S. following the results of the Phase 2b trial. We will be continuing our dialogue with the FDA as part of our overall planning for late stage clinical development in the U.S. During 2015 momentum increased in [indiscernible] product development program was MIN-202 which is being co-developed by Minerva and Janssen Pharmaceutical NV. To provide some background Minerva entered into a co-development and license agreement with Janssen in February 2014 covering MIN-202 and other orexin 2 compounds. Let me walk you through the studies carried out in 2015 for which we have already study read-outs. On January 11 of this year we announced positive top line results from a Phase 2a clinical trial in patients suffering from insomnia disorders not associated with [indiscernible] disorder. Since the release of top line results in early January this year, additional data from this trial have become available. The study was conducted at clinical sites in the U.S. and Europe. In this double-blind placebo control trial 40 milligram of MIN-202 was tested over treatment duration of five consecutive nights. So data obtained by means of polysomnography PSG recordings and objective measure of sleep indicated MIN to improve significantly sleep adaption [ph], restore sleep duration and preserve key phases of sleep particularly deep sleep thus enabling [indiscernible] sleep. The primary end point of the trial was sleep efficiency for which a positive efficacy signal was detected after treatment was MIN-202 placebo is a p value of 0.001, additional statistically, significant p value 0.001, positive efficacy signals were observed for key secondary parameters including latency persistent sleep, LPS, wake after sleep onset, WASO and total sleep time, TST, compared to placebo MIN-202 was observed significantly improved polysomnography parameters p 0.001 on days one and five. On day 5, LPS and WASO were reduced by 23.2 and 11 minutes, TST and sleep efficiency increased by 39 minutes and 8.12% respectively. Subjectively estimated TST, LPS and WASO also improved versus placebo by 43.1, 38.8 and 14.8 minutes. Overall significant correlation was formed between objectively and subjectively regulated sleep parameters. Most of these adverse events were observed in this trial and primarily data indicated MIN-202 is well-tolerated. We expect additional details of this data to be presented at a peer reviewed forum. The second study for which we have read-outs was carried out in patients suffering from major depressive disorder. This randomized multi-center double-blind parallel group [indiscernible] placebo control study evaluated the effect of MIN-202 in MDD outpatients 18 to 65 years of age. 48 patients were enrolled in three groups that received doses of 20 milligram of MIN-202 daily, 25 milligram of [indiscernible] daily, used as a positive control to induce sedation or placebo over four weeks. The primary end point of safety and tolerability and secondary endpoints included assessments of depressive symptomatology, cognition and sleep. The trial was conducted in seven clinical sites in Europe. We have reported online top line results which were for safety, tolerability and efficacy on the depressive symptomatology. MIN-202 was well tolerated by study participants over one month treatment duration with no new observed emerging safety signals and serious adverse events. Constantly greater improvements in depressive symptomatology that observed in patients randomized who received MIN-202 compared to those randomized who received placebo different domain [ph] as measured by clinician administrative [ph] rating scale including the American Depression Rating Scale HDRS17, core symptoms of depression as measured by [indiscernible] were observed to be significantly improved in the MIN-202 when compared with placebo. Complete results are planned for peer reviewed presentations in the future. The results described both types of ways to initiate a Phase 2b trial in-patient suffering from MDD. This improvement supports the potential of MIN-202 to have a direct effect of mood in dependence from it's effect from sleep. Later from a search trial for MIN-202 became available earlier in this year as well. In this Phase 1 trial those morning administration of MIN-202 was observed to be well-tolerated in healthy Japanese adult males by the participants. To observe plasma pharmacokinetic features were comparable to those observed in previous studies carried out in healthy non-Asian study participants. These findings are important step in the planned global development of MIN-202 as they are up to the expanding data base of study participants treated with this compound worldwide and support further clinical testing in an important part of the world. Our third clinical Phase compound is MIN-117 in development to treat major depressive disorders or MDD. We recently completed enrollment of 84 patients with MDD in a Phase 2a randomized double-blind parallel group placebo and active control clinical trial with MIN-117 in Europe. These patients were enrolled across the four treatment arms of study which include 0.5 and 2.5 milligram daily of MIN-117, 20 milligram daily of orexin and placebo. The primary objective of this trial is to evaluate efficacy of MIN-117 given at 0.5 milligram and 2.5 milligram daily in reducing the symptoms of a major depressive episode as measured by the change from the baseline in the Montgomery-Asberg Depression Rating Scale (MADRS) total score over six weeks of treatment. Additional objectives include the assessment of onset to response, severity of illness, sexual function, executive function, working memory and safety and tolerability. Top lines results from this trial are expected in the second quarter of 2016. Finally, our preclinical stage product candidate is MIN-301 to treat Parkinson's disease, MIN-301 is a recumbent protein with extracellular domain of Neuregulin-1b1, primarily activating ErbB4. This regulation of the Neuregulin 1 signaling pathway has been linked to neurodevelopmental and neurodegenerative disorders including and beyond Parkinson's disease. Looking at the data, with an analog of means we have one represented in December 2015 at the American College Of Neuropsychopharmacology, ACNP. This data demonstrates a beneficial effects of treatment with MIN-301 of behavioral and motor deficits in animal models. Results also suggest that neuroinflammatory surrogate markers should be explored in future Parkinson's disease. So next planned steps in the MIN-301 program are defining of an IND in the U.S. or an investigational medicine product of IMPD in Europe and pending acceptance by regulatory authorities, the initiation of Phase 1 clinical testings are after. In summary we have announced positive results from 2 or 4 clinical trials scheduled to read out in the first half of 2016. We look forward to the upcoming data from the other two trial in the second quarter of the year. I will now turn the call over to Jeff to cover our financial results.

Thank you, Remy. Earlier this morning we issued a press release summarizing our operating results for the fourth quarter and the year-ended December 31, 2015. A more detailed discussion of our results may be found in our annual report on Form 10-K also filed earlier today. At December 31, 2015, the Company's cash, cash equivalents and marketable securities were approximately $33.2 million compared to $18.5 million as of December 31, 2014. During the first quarter of 2016 the company received approximately $17.5 million in proceeds from certain existing shareholders who exercised warrants, granted in connection with a product placement in March 2015. Warrants for a total of approximately 3 million shares of common stock were exercised in an exercise price of $5.77 per share. As a result Minerva excepts that it's current cash, cash equivalents and marketable securities will be sufficient to fund it's operations into the second quarter of 2017. Research and development expenses were $6.3 million in the fourth quarter of 2015, compared to $3 million in the fourth quarter of 2014. R&D expenses were $18.5 million for the year-end December 31, 2015 compared to $42.9 million for the year-ended December 31, 2014. R&D expenses for the year-ended December 31, 2014 included a $22 million license fee paid to Janssen pursuant to our co-development agreement on MIN-202. R&D expenses for the year's ended December 31, 2015 and 2014 included non-cash stock-based compensation expenses of $0.6 million and $13.1 million respectively. Excluding stock-based compensation and the $22 million license fee, total R&D expenses related to drug development programs for the year's ended December 31 2015 and 2014 were $17.9 million and $7.8 million respectively, an increase of $10.1 million. This increase in R&D expenses primarily reflect increased expenses related to our Phase 2b clinical trial of MIN-101, our Phase 2a clinical trial of MIN-117 and the MIN-202 Phase 2a and 1b clinical trials. General and administrative expenses were $ 1.9 million in the fourth quarter of 2015 compared to $4.5 million in the fourth quarter of 2014. G&A expenses were $7.6 million for the year-ended December 31, 2015 compared to $12 million for the year-ended December 31, 2014. G&A expenses were for the year's ended December 31, 2015 and 2014 included non-cash stock based compensation expenses of $1.6 million and $4.9 million respectively. Excluding stock based compensation, G&A expenses for the year's ended December 31, 2015 and 2014 were $6 million and $7.1 million respectively. Net loss was $8.4 million for the fourth quarter of 2015 or a loss per share of $0.34 basic and diluted compared to a net loss of $7.4 million for the fourth quarter of 2014 or a loss per share of $0.40 basic and diluted. Net loss was $27.1 million for the year-ended December 31, 2015 or a loss per share of $1.16 basic and diluted compared to a net loss of $56.9 million or a loss per share of $4.47 basic and diluted for the year-ended December 31, 2014. The proceeds generated from the recent warrant exercise strengthened our financial position and extend our run-way significantly. Again, we expect our currently available financial resources to enable the advancement of our drug development pipeline into the second quarter of 2017 including the clinical milestones described earlier by Remy. Now I would like to turn the call over to the operator for any questions.

[Operator Instructions]. Our first question comes from the line of Jason Butler with JMP Securities. Your line is open.

First one just on the Phase 2 trial for 101 in schizophrenia, can you just walk us through the powering assumptions for the primary endpoint? Are you powered for the total PANSS or just the negative symptom subscale? Thanks.

So definitely the primarily endpoint is negative symptom so the study is really powered for positive results on the negative symptoms. All the other parameters although -- overall PANSS score positive symptoms cognition are definitely secondary endpoints.

And then are there any other differences between the negative symptom subscale that you’re using for this trial and the typical negative symptoms that we think about from the PANSS, is it just negative symptom component of the PANSS?

In fact as we know we’re analyzing the negative symptoms in two ways, they can call the typical way or the classical way and the pentagonal way which is based on the principal component analysis. In our case as a primarily endpoint is a pentagonal score for very simple reason because drug is probably having a much broader effect on the negative symptoms and the pentagonal score seems to represent much better part of physiology of the patients.

And then just a quick question on MIN-202, can you just help us put into context the data we saw last week in terms of the anti-depressant benefit relative to currently available anti-depressants and maybe provide some color on your --regarding the independent effect from depression that you saw versus just the derivative effect on sleep?

Obviously it's a very good question and we’re very excited about these results. So what we have seen is when you’re analyzing the American Depression scale [ph] excluding the sleep parameters, the effect on mood is maintained. So this confirms really very well the effect is a direct effect on mood and not mediated effect on sleep.

[Operator Instructions]. And I'm not showing any further questions. I would like to turn the call back to William Boni for closing remarks.

Thank you everyone for participating on the call today and please don’t hesitate to give me a call directly with any questions or to follow-up on the press release issued today or the press release issued on Friday. Thank you very much.

Ladies and gentlemen thank you participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.