Minerva Neurosciences, Inc. (NERV) Q1 2021 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Minerva Neurosciences First Quarter 2021 Conference Call. At this time all participants are in listen only mode. After the speakers presentation there will be a question-and-answer session. Please be advised that today's conference may be recorded. I'd now like to hand the conference over to your host today, Mr. William Boni, Vice President of Investor Relations. Please go ahead.

Thank you, Bill. Thank you so much. So, hello, everybody. I am really, really very proud and very excited to walk you through this recent results about the open label extension of our Phase 3 study. I think these data are really an important additional piece of information concerning roluperidone and the treatment of negative symptoms in schizophrenia. But before -- before jumping into the data, I really would like to thank once more, all the patients, all the families, all the caregivers and obviously also the clinical sites here in the US and in Europe who have participated through this trial, because I know how difficult it is to be in a trial for more than one year. So let me jump into the data. And what you can see on Slide 4 is, but rather the objectives of this open label extension. So the first point, and we discussed this in the past is to look long-term safety. And this is to tick the box about one-year administration of the drug, but I think it is also very, very important in order to give us a better understanding of the long-term safety and tolerability of roluperidone. And as you will see, I think this is a very important and extremely encouraging and good for roluperidone. But obviously, because as you know, negative symptoms is a core symptom of the disease of schizophrenia, but it is also the symptoms, which are really long lasting as you know negative symptoms are present even before patients have their first episode of positive symptoms, and it is really the chronic part of the disease.

Thank you, Remy. Earlier this morning we issued a press release summarizing our operating results for the first quarter ended March 31st, 2021. A more detailed discussion of our results may be found in our quarterly report on Form 10-Q filed with the SEC earlier today. Cash, cash equivalents and restricted cash at March 31st, 2021 were approximately $80.2 million compared to $25.5 million as of December 31st, 2020. In January 2021, the company received a $60 million cash upfront payment from Royalty Pharma in connection with Royalty Pharma's acquisition of the Company's royalty interest in seltorexant. We also have the potential to receive up to a further $95 million in additional payments contingent on the achievement of certain clinical regulatory and commercialization milestones. The significant non-dilutive funding provided by our agreement with Royalty Pharma both immediate and potentially over the longer term will support our top priority, the continued development of roluperidone our lead asset. Recall that seltorexant is currently in Phase 3 clinical development by Janssen Pharmaceutica, a subsidiary of Johnson & Johnson for the adjunctive treatment of Major Depressive Disorder with insomnia symptoms. We presently expect that the company's existing cash and cash equivalents will be sufficient to meet it's anticipated capital requirements for at least the next 12 months from today. Based on our current operating plan, the assumptions upon which this estimate are based are routinely evaluated and may be subject to change. Research and development expenses were $3.3 million and $8.1 million for the 3 months ended March 31st, 2021 and 2020 respectively, a decrease of approximately $4.8 million. The decrease in R&D expenses was primarily due to lower costs for the Phase 3 clinical trial of roluperidone as a result of the completion in May 2020 of the 3-month core study portion of this trial. Non-cash stock compensation expense included in R&D expenses was an $0.6 million and $0.7 million for the 3 months ended March 31st, 2021 and 2020 respectively. G&A expenses were $4.2 million for both the three months ended March 31st, 2021 and 2020. G&A expenses included compensation costs, consulting expenses and insurance premiums. Noncash stock compensation expense, included in G&A expenses was $0.9 million and $1.5 million for the three months ended March 31st, 2021 and 2020 respectively. Net loss was $8.8 million for the first quarter of 2021 or a loss per share of $0.21 basic and diluted compared to a net loss of $12.2 million for the first quarter of 2020 or a loss per share of $0.31 basic and diluted. Now, I'd like to turn the call over to the operator for any questions, operator.

Our first question comes from Jason Butler with JMP Securities.

Hi, thanks for taking the questions and Remy, really appreciate you going through all the details there. Just thinking about, I guess the what magnitude and progression of improvement. Are there historical data for patients with negative symptoms that kind of speaks to how likely they would be to recover in that manner without treatment intervention both again the magnitude and the progression of the improvement over the full one year?

Hi Jason, so, great question. And obviously, I was expecting this kind of question. First, I think it's important to mention that may be the study design we have used is not absolutely the same as what you can find in the literature, but nevertheless I mean, you can find situations where we have a similar study design and where you could get some more color by comparing our data to existing data. So I think what, what is very clear is that in most of the cases, I had seen and then in we could find in the literature is that usually I mean you have an improvement, which is occurring quite fast and afterwards the things are really flattening when you are going over several weeks and obviously several months, and so the things are flattening very quickly. Yes, I mean in terms of improvement. I'm speaking here about negative symptoms. If you go with patients who had an acute relapse of positive symptoms. As you know when you bring them down, they are, have to say, having a small improvement of negative symptoms, which is the effect that I mean afterwards the things are flattening. So, basically, what it means, I think is that, I mean you have no real specific improvement of negative symptoms, whereas in our case, I think it's also precautions of the study design of the open label extension. I think it is fair to say that this continuous improvement over time is something, which in best of my knowledge to use the term is unique. Now, in terms of the level of decrease again I think we have to put it in the context of the patient population included in this study. Remember that we wanted to have patients who have a minimum score of 20 points in terms of negative symptoms as they needed to be stable before entering the study and basically we ended up with patients who have, who had score baseline of around 25- 26 points in terms of negative symptoms. So, keep in mind, that the minimum is 7 points. That's because when we are using the PANSS, there is no zero. One is absence of symptoms on each item, but when you're, where there is a consensus, is that, I mean if you bring back someone to 20 points and below. You know, these patients are probably starting to function again of functioning better, which by the way is demonstrated with our PSP data. So I think we are really at the level where indeed based on what is somehow consensus in terms of where you need to be in terms of negative symptoms, to be able to function _____ 2:49 so this is I think what can be the answer to your question to compare this to antipsychotics and whatever, as it is not -- is not really what you can do because we are really dealing with the same pharmacology and dealing exactly with the same drug as here. So, this is what I can answer to your question.

That's helpful, Remy. Thanks. And then just regarding the next steps with FDA, what would be the trigger for the next FDA interaction? Is it the completion of the bioequivalence study? Obviously, we would expect you to submit a package that also includes the new LLE data, but any sense of like what the trigger would be for the next meeting and when the next interaction with FDA, formal interaction with FDA could happen.

Yes, I think formal interaction is a right term because I mean we are interacting with the FDA because we interacted with the FDA when we, when we -- before we started our bioequivalence study because we protocol. We also have already answered some of the questions, which came out from the Type C meeting, but it is extremely clear that one important point to or box to tick is about the bioequivalence between the formulation, which has been used in Phase 2b and Phase 3. And when this study is completed, we indeed will be really start to finalize all what we need in terms of briefing book documentation in order to go back again to the FDA to discuss next step and then . But, yes, so this is a timing also of the sequence of events, which will happen before we go again in front of the FDA.

Okay, great. Thank you and thanks for taking the questions.

Thank you, Jason.

Our next question comes from Tom Shrader with BTIG.

Good morning. Congratulations on the data and also on the perseverance. It's really remarkable especially in the phase of a second pretty good drug. So, my question has to do with your final points you hit on that are I think quite interesting this idea that the drug gets patients to a good enough state in terms of negative symptoms but then they're able to form routines and sort of get going on life again and so you have this long-term effect. Do you need to sort out the role of the clinical trial environment in that? Do you think you need to do a year of placebo-controlled now and is that hard? And then the follow-up is, do you think the continued improvement in positive symptoms argues that it is a pharmacologic effect? So I'd just like to hear your thoughts on that idea.

Yes. So, I honestly. I mean you know my opinion I mean, you're going according to the guidance at the end of 2019 if you're dealing this unmet medical need and if you have really a means of package we have today, I think we have enough data to go to see the agency again and obviously we are really listening to all the different comments we are receiving. Do we need a study where we are doing a one year placebo-controlled and is it possible? I think it is possible to run a study like this. I think obviously that it will give additional color about how meaningful all this is we have here, but nevertheless, keep in mind that there is some blinding in this data nevertheless and historical comparison are really speaking in favor of our data, but if we have to do such kind of study and I think it is an important study, I think that, I mean, because we are here facing such an unmet medical need, this should be a study, which has to be done in phase 4 and so much more other studies, which could be done in phase 4 to show the full potential of the drug. Now concerning the pharmacology point you're raising, obviously you have to be very honest when I started and this is no long time ago to work on this molecule, I was convinced that the pharmacology is a right pharmacology to keep positive symptoms stable or to improve them. Yes, long time ago when I was very young, I was the first one working on MDL 100907, which is a pure 5-HT2A antagonist and you know the history of this molecule, it was stopped, because it was no better than haloperidol in terms of controlling positive symptoms, but it is completely clear that 5-HT2A antagonist is able to do something on positive symptom and the same that I mean 5-HT2A antagonist is able to control an acute episode of positive symptoms, but here we have a single drug for acute episodes, which are antipsychotic system and as a B2 blocking molecules. Definitely, there is something going on there. There is also interesting enough good literature out there showing that for the younger patients, while the disease is really not already chronic, a treatment with a 5-HT2A alpha 1A molecule is probably better than going to treat them with beta blocking molecules. So those I think quite convincing literature out there. So again, I mean this is an additional layer of having assets, I mean while improving positive symptoms. And last but not least, if you're going back to the history of sigma, 2 sigma licensing development long time ago and I was involved in one which was a sigma molecule from Sanofi I tested in my research institute when I was running my Research Institute and the hypothesis is that I mean sigma is modulating the dopaminergic tone. And as you know schizophrenia is not about only hyper dopaminergic activity. It is also about hypodopaminergic activity, particularly in the prefrontal areas of the brain, which might also be linked to negative symptoms, so yes, I agree with you. I think the pharmacology is definitely contributing.

And if I could just ask a quick follow-up. Was the removal of drugs for positive symptoms for the entirely, was that a complexity or were these patients that were essentially so sure those drugs weren't working for them, that it was not an issue with treaters?

I think it was no longer an issue because we had already the data from the Phase 2b. Keep in mind that in the Phase 2b, we had 6 months extension to the 12 weeks double-blind. So I think even going through the _____ 1:29 committees and so on at the beginning. I mean I'm speaking at the beginning of the project. I mean, I'm speaking here about the Phase 2a. Yes, I mean it was obviously a challenge because yes, everybody believes or believed modestly seeing at our data are no triggering a lot of research about what you should do to really help these patients and to keep them obviously stable in terms of positive symptoms, avoiding relapses and so on. So a lot is going on, but I think we already had good data indicating that the risk is not really important there. Keep also in mind, that if I mean you ever have worked in psychotic facilities, you know a patient becomes not, I have to say active in terms of positive symptoms that is not an acute relapse, even if we called it acute in one hour. Yes, I mean this is a process which is going on for several days or several weeks before I mean the relapse occurs or the necessity of hospitalization is there and rather this is the reason why I mentioned also in some of the part, because I mean often some of the symptoms are, for example, obviously more agitation and a bit more aggressivity but also definitely insomnia. So, again I think skilled investigators are already aware about this, and they have the tools in order to pick up someone who might relapse basically at the end of the day.

Great. Thank you very much for all the details. And congratulations, again.

Thank you so much.

Our next question comes from Jay Olson with Oppenheimer.

Great. Congrats on these new data and thanks for taking the questions. Can you just talk about the performance of the patients in the open-label extension who switched from placebo to active and how those patients compared to the patients who aren't active all along and what you might have learned from that comparison?

Wonderful. This is really a great question, and I think the answer is on slide 10, I mean on the summary table. So basically, I think the best interpretation I see of this data obviously is that patients who completed the double-blind phase receiving placebo; let me call them placebo responder, I mean, but what you can see when you're looking to comparing the different groups here and comparing particularly with patients who have been treated for the configuration of the study with active drug versus the one who switched to active drug after the double-blind phase. I think what is added to these patients in terms of improvement is the improvement in terms of the specific aspect of negative symptoms, which is related to functioning, which is this emotional experience, you see the PSP is really picking up. So basically, I think what we are doing here when we are putting our even to patients who have a response to placebo is that I mean we are really improving them specifically in terms of negative symptoms in terms of functioning. So this needs a more detailed analysis, but I mean this is regularly popping up and we are really trying to integrate the data here. But clearly, I mean they are improving and best of what I can see from the data as of today is just having the additional boost here in terms of the specific effect itself in terms of negative symptoms and function.

Okay, great. Thank you for that. And then maybe if you could talk about from a big picture perspective, why has it been so difficult to develop drugs to treat the negative symptoms of schizophrenia. And then from a competitive perspective maybe if you could compare roluperidone to pimavanserin in terms of the mechanism and the data that you have or any other drugs in development for negative symptoms. Thank you.

So, it's a great question and I should not be too long, yes, because here I could go on forever. Yes. But I think we have to recognize that schizophrenia is basically about negative symptoms and this is the most enduring symptom -- onset of symptoms you have in the disease present in adolescence before it is a full blown disease and extremely chronic over time. So really to target this aspect needs to have a drug you definitely are targeting the right pathways in the brain. I think it's clear what I mean, and this is my dreams that post approval, we will do some studies where we are going to read it to adolescence and to patients at risk of the first episode patients, because the likelihood to have this patients is even bigger. So what I also seeing is that in the long term, don't take me wrong antipsychotics or in other words, dopamine-blocking molecules are important molecules, but these are major tranquilizers or looked as major tranquilizers to treat where is the acute part of the diseases and it is good to see that now we have some treatment even blocking dopamine who are less sedating, less impairing and also, less impairing in terms of negative symptoms. So what the data showing that when you're lowering the antipsychotics explorer, you see also the patients functioning a little bit better. So I think this is the most difficult part to treat. Keep also in mind, that I mean negative symptoms is a constructers, because you have, you have avolition, you have anhedonia, you have all these kinds of things. I personally think that you need to have an effect on avolition why because when you think about these patients that were really good at school, they were interested in a lot of things and suddenly they're losing this capacity to be interested in something and this is a beginning of all the symptoms, you might see afterwards in the disease. I really think that the with our data are showing is that, I mean we are improving avolition and afterwards you know you have this positive loop starting. So again, long story short, I think you need to have a drug, which is not impairing, you need to have a drug, which is doing the right job in terms of targeting the right pathways in the brain which are involved in negative symptoms and afterwards the things patient has insights with the help of caregiver and the people at the hospitals, psychologists and slowly but surely are coming back and are able to cope with the everyday life. So this is the reason why you know -- comparing to competition or whatever the term is, I'm hesitating to do this as -- but you heard me already saying that 5-HT2A activities, an important activity, if you want to really treat the overall psychopathology and particularly positive symptoms, keep in mind also that the 5-HT2A molecule is also having an effect on sleep, which can be related to memory consolidation, cognition but honestly I think it is not completely enough in order to have really the complete recovery and patient who is functioning at the end of the day. So, again I think this is a reason why. And I think I should stop here this comparison to competition because it would not be fair to my colleagues who are trying to come up with other innovative treatments

Great, thank you very much. It is super helpful. I appreciate you taking the questions.

Thank you.

Our next question comes from Douglas Tsao with HC Wainwright.

Hi, good afternoon or good morning and thanks for taking the questions. Just, I think after we saw the data from the placebo-controlled portion of the study sort of indicated that really we're going to sort of focus in on the 64 mg dose, just given what we saw from the open-label extension and just sort of really the robustness of what we saw with 32 mg and I know it was sort of -- it seems very manageable. We did see some QT prolongation. Does that sort of make you think or sort of increase the reason for pushing development for the 32 mg as well, just to have that as a therapeutic option?

So, we discussed this and I'm really in favor always of having different doses as an option for the treating condition. The experience shows that this is very helpful. This said, when you're looking to the data, I think it's a fair statement to say that the two doses are showing very, very, very similar effects. but it is also I think while it is also fair to say that 64 mg seems to do a better job in terms of functional improvement it's quite clear in terms of PSP 64 is doing a better job. I'm not saying that 32 is not doing anything. No, no, it is definitely improving patients, but 64 seems to be better and you know we do not experience sedation. We have no -- it has nothing like this, So, probably, I mean, 64 it's probably a better dose in order to really help patients with minimum at the beginning of treatment. So long story short, I think if we could convince the FDA that the two doses are helpful, may be 32 as a maintenance dose and 64 as a dose where you can help patient of the initiation of treatment or even when needed during the course of treatment. I think this would be great news. Keep also in mind, that 32 is a dose we will continue to work on because post approval, we will have to do the pediatric studies and for the pediatric study, 32 milligram is one dose we are considering. So, so we will accumulate data also with 32 mg, but I agree with you, the two doses are helpful, even so, I think 64 is a little bit more effective in terms of improving function.

And Remy, just as a follow-up on the dosing. In talking to clinicians and clearly I think you've demonstrated that this drug can have significant utility as monotherapy. Just talking to some clinicians many sort of talk about this as being used with -- in combination with another antipsychotic and do you think in that context, perhaps the 32 milligram might be the way to go, or do you think, even there as you would you would prefer 64 and have one other quick follow-up after that, after this.

It's a great question. I think what this data will generate is a lot of discussion about do we need that in all the patients a chronic treatment of antipsychotic. So this is already a more broader question of going to largely beyond the Minerva. But I think really that I mean we could think about a strategy to treat patients while being 32 mg would be the maintenance dose and you have either 64 mg or an antipsychotic to help going over the an acute episode of agitation some more predominant positive symptoms. And this might be a way to move, forward. So this is how I see it. So probably this opens the space of a lot of different strategies for a larger number of patients suffering from schizophrenia.

Okay. And then, just -- I know we're certainly -- and the data certainly would suggest you have an approvable drug. Just in -- if the agency were to sort of still request an additional Phase 3 just given what we saw from the open-label so maybe building on sort of what Tom's question about how you seem to have as time goes on the benefits seems to accrue? I mean would there be worthwhile reconsidering sort of having a longer double-blind placebo-controlled section? I mean I know it sort of reduces some of the comparability, but just clearly, it sounds like -- it looks like the effects continue to build over time and presumably that would, a longer study would sort of mitigate some of the waxing and waning of on the placebo one as well. Thank you.

It's a great question, Doug. Just I mean, if you're looking through the data you remember. I mean, we had the p-value at 4 weeks and 8 weeks placebo compared to 64 in this trial, it is a double-blind phase and we had obviously a significant difference in the Phase 2b study, even modified ITT population. We have a nominal p-value of 64 mg. So, I think really we have really we had an extremely positive Phase 2b study and because of the drug, it cannot be picked up to the side effects. We suffered a little bit from inflation although it was a double-blind phase. On this side Doug, I agree with you. I think the longer is better in order to get the placebo effect under control. So I'm not saying that we should do a longer study. I'm just saying that it is something to consider if I mean as we think about the next trials with other types of trials .

Okay, great. Thank you so much and congrats on the open-label data.

Thank you, Doug.

Our next question comes from Myles Minter with William Blair.

Hi, everyone. Congrats on the data and thanks for taking the questions. That 11.7% relapse rate seems pretty impressive and definitely above the expectations of clinicians that I've talked to on roluperidone monotherapy here. Yes. A brief look at the literature would suggest that it was an acute psychosis patients is high as like 40% to 80% relapse over 12 months when you withdraw therapy. I know this is a completely different patient population. So, like how do we think about that 11.7% relative to what we would expect in the real world with this particular patient population in the Phase 3?

Yes, great question, Myles. So obviously, I mean when you're in the trial -- I mean, there is always something which is not absolutely the same as in real world and when you are in your clinical practice. This said, I mean we tried really to go according to clinical practice. So in other words, we switch quite quickly from the antipsychotic to our drug in monotherapy, and all this is very similar to what you're doing in clinical practice. So I think it can be compared to what will happen in real life. Now, your question about this specific study population, I'm not with you here in terms of specific study population. I mean I think we just took the patients at the different level than what you're doing usually in accurately relapsed patients. So basically, you know when we look into to our inclusion-exclusion criteria are very similar to what you have in other trials. Yes, indeed. I mean we don't types of criteria of the total PANSS score. We have the criteria of checking that in these patients have a certain level of cost negative symptoms and indeed, we are switching them from antipsychotic to our treatment when they are stable in terms of positive symptoms and we're glad to say that the positive symptoms 14 - 15 points is quite low. But so let's say on the completely reviews that I mean this is a different patient population and we know when you're going according to the literature, based on our eligibility criteria, and this represents around 60% to 65% of the patients with a diagnostic of schizophrenia. So again it needs to be fine-tuned. I'm not claiming again that our drug -- the data we have currently in hand is a drug, which helps to treat acute episodes of positive symptoms, not at all, I'm not saying this. But I look completely reviews of this is a completely different populations than the population we are currently seeing in clinical trials and population we have to treat in our clinical practice. This is my answer to your question.

I completely understood and relapse rate regardless is definitely impressive. Maybe one on the bioequivalence study, as well, another was mentioned in the press release this morning that you'd be testing an additional commercial and scalable formulation or at least one of them. Is the aim in this trial is still to determine non-inferiority between the Phase 2b the Phase 3 and these commercial formulations in terms of area under the curve exposure? Are we going to be looking at that BFA 5-20 metabolite again that I know was the sort of concern with the QTc why prolongations at the Phase II, any thoughts there would be helpful.

No, no, I mean you're completely described it correctly. Yes, I mean, definitely. Remember, we know that the efficacy is driven by exposure because we did a lot of PK-PD modeling. And obviously we will do this with data including the extension data. So this is a primary objective for sure and we will continue to control as a metabolite . So you're completely described what is the objective of the study.

Okay. And the final one is just for Geoff, you mentioned $95 million in potential milestones from the seltorexant royalty to Royalty Pharma. Some of those linked to clinical milestones. There is a lot of Phase 3 trials coming on at Janssen for that product. Can you comment whether any of those milestones are weighted to like the right out of one of those trials. Is the whole program has to be completed before, you would potentially receive a milestone there, anything you can disclose that would be great.

Yes. So there is a mixture of triggers. Part of it is due to clinical progress, significant part of is due to regulatory approval in different geographies, and there are some sales bonuses there as well.

Okay, cool. Thanks for the questions and congrats on the data looks great.

Thank you.

Thanks, Myles.

That concludes today's question-and-answer session. I'd like to turn the call back to Remy for closing remarks.

Thank you. So, thank you all and hopefully you enjoyed it. I think we continue to work harder to put together the best package here because I think it is extremely motivating the data we have seen today and the it is also extremely important that this draft is moving towards patients who are in need of new treatments for negative symptoms because keep in mind that there is no treatment approved as of today in the U.S. for negative symptoms. So, I'm really looking forward to update you very soon about the bioequivalence study, about pharmacology, about all news coming up, thank you again and hope to speak with you very soon. Bye. Have a nice day.

This concludes today's conference call. Thank you for participating. You may now disconnect.