Minerva Neurosciences (NASDAQ:NERV) Q1 2020 Earnings Call

0:00 Welcome to the Minerva Neurosciences first quarter 2020 conference call. At this time, all participant lines 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 investor 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 conference over to William Boni, Vice President of Investment Relations, and Corporate Communications at Minerva. Please proceed. Good morning. A press release with the company's first quarter 2020 financial results and business highlights became available at 7.30 a.m.

0:53 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. Jeff Race, Executive Vice President, 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.

1:55 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 31, 2020, filed with the SEC on May 4, 2020. Any forward-looking statements made on this call speak only as of today's date, Monday, May 4, 2020.

2:40 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. Thanks for joining us. I hope everyone is doing well. Today I will focus on Minerva's two advanced clinical stage products, Roliparidone, which is in a pivotal phase 3 trial, and Celtorexant, which has completed phase 2b testing. For Roliparidone, we are rapidly approaching the company's key event for 2020. The readout of top-line results expected this quarter from our phase 3 trial with this compound to treat negative symptoms in schizophrenia.

3:34 We are evaluating, along with our partner Janssen Pharmaceutica, a number of protocols for phase 3 trials. I will begin with rhodoperidone. The phase 3 trial is a randomized, double-blind, parallel group, placebo-controlled, 12-week study to evaluate the efficacy and safety of 32 mg and 64 mg doses of rhodoperidone as measured by the positive and negative syndrome scale. The primary endpoint is a milder negative symptoms factor score. Secondary endpoints include the personal and social performance scale and clinical global impression of severity. As we announced last February, a total of 515 patients have been enrolled in this trial at clinical sites in the U.S. and Europe.

4:22 The patients have been randomized one-to-one-to-one to 32 mg and 64 mg doses of rhodoperidone and placebo. The 12-week double-blind phase of the trial is followed by a 40-week open-label extension period during which patients on the drug have the option to continue receiving their original dose, and patients on placebo may receive one of the two doses of roliparidone. Progress in this trial has been unaffected to date by the coronavirus pandemic. We are continually monitoring each trial site and our contract research organizations to ensure the safety of all patients and their access to study drug.

5:07 The last patient visit has taken place in the 12-week double-blind phase of the trial. I am pleased to report that in total, 362 patients have completed the double-blind phase, 333 patients from the double-blind phase have elected to transition into the open-label extension period, and 92 patients have completed the extension phase as of April 30th, 2020. We look forward to the database log and beginning of data analysis late this month. The design of the phase three trial has been informed by feedback from the FDA beginning with our end of phase two meeting and subsequent communication with the agency. The prominent role of negative symptoms in schizophrenia has been increasingly highlighted by the key opinion leader community since we initiated the phase 3 trial.

6:00 In fact, our development of Roliparidone has been shaped by a fundamental view of schizophrenia. While positive symptoms present intermittently during the course of the disease, negative symptoms persist and worsen over the lifetimes of the majority of patients. Thus, severely limiting the functional ability and preventing the social and vocational reintegration over the longer term. No drug is currently approved to treat the negative symptoms of schizophrenia or negative symptoms present in other conditions, including developmental disorders, affective disorders, and neurodegenerative disorders. We are excited about the possibility of the Phase III data addressing this significant unmet medical need and pointing the way to a new treatment paradigm for negative symptoms beginning with schizophrenia.

6:54 Moving on to celtorexant, we are looking to build upon the three positive Phase IIb trials and one Phase Ib trial completed during 2019 as we plan the Phase III program for this promising compound. Results of those trials showed that celtorexant has positive effects on insomniac patients without comorbidity, including elderly patients with a favorable safety profile. In patients with major depressive disorder, MDD, who do not respond adequately to SSRIs and SNRIs, celterectin also showed improvement in mood, particularly in patients with insomnia. The current target indication under consideration for phase three is adjunctive treatment of MDD in patients with insomnia symptoms.

7:45 We and our partner, Janssen, are discussing feedback received from the U.S. FDA during our recent end-of-phase meeting into the Phase III development strategy, including several clinical protocols to support that indication. Our discussion with Janssen also includes decision-making control of the program and achievement of defined milestones under our agreement. Before I conclude, I would like to offer a few additional thoughts about Rolly Paragon. To the best of our knowledge, Roliparidone is the only drug having shown to date a specific and direct improvement of primary negative symptoms in a randomized, double-blind, placebo-controlled, face-to-be clinical trial.

8:30 Additional data analysis from that study shows that patients also improve in terms of cognition, mood, and functioning, thus further demonstrating what we believe are the unique qualities of this agent. Among emerging therapies in development for negative symptoms, Roliparidone is the most clinically advanced, and the Phase 3 trial has been designed to test its efficacy as monotherapy versus placebo, absent the co-founding effects of co-administration with atypical antipsychotics. We are excited about the possibilities for Roliparidone as we plan to share the top-line results from the Phase 3 trial in the not-too-distant future. I will now turn it over to Jeff. Thank you, Remy.

9:17 Earlier this morning, we issued a press release summarizing our operating results for the first quarter ended March 31, 2020. A more detailed discussion of our results may be found in our quarterly report on Form 10Q filed with the SEC earlier today. Cash, cash equivalents, restricted cash and marketable securities as of March 31, 2020. were approximately $37.6 million compared to $46 million as of December 31st, 2019. We presently expect that the company's existing cash and cash equivalents will be sufficient to meet its anticipated capital requirements for at least the next 12 months from today and into mid-late 2021 based on our current operating plan.

10:09 The assumptions upon which this estimate is based are routinely evaluated and may be subject to change. Research and development expenses were $8.1 million in the first quarter of 2020 compared to $11.6 million in the first quarter of 2019. The decrease in R&D expenses primarily reflects lower development expenses for the Phase III clinical trial of Roliperidone and the Phase IIb clinical trial of MIN117. R&D expenses are expected to decrease during 2020 with the completion of the Phase 2B trial of MIN-117 and the 12-week double-blind portion of the Phase 3 clinical trial of Roloteridone. General and administrative expenses were $4.2 million in the first quarter of 2020 compared to $4.7 million in the first quarter of 2019.

11:06 This decrease in G&A expenses was primarily due to a decrease in non-cash stock-based compensation expenses and a decrease in professional fees. Net loss was $12.2 million for the first quarter of 2020, or a loss per share of $0.31 basic and diluted, compared to a net loss of $15.8 million for the first quarter of 2019, or a loss per share of $0.41 basic and diluted. Now I'd like to turn the call over to the operator for any questions. Operator? Thank you. To ask the question at this time, you would need to press star then 1 on your telephone. To withdraw your question, please press the pound key.

11:53 Again, that is star then 1 if you would like to ask the question. Our first question comes from the line of Jason Butler with JMP Securities. Your line is now open. Hi, thanks for taking the questions. Remy, I know you talked about this before, but with the data for all the paradigm fast approaching, just wondering if you could remind us of the baseline characteristics you've seen in the Phase III trial on a blinded basis versus what you had in the Phase II trial, and then give us an update on what you've seen, again, on a blinded basis in terms of positive symptom relapse. Thanks. Hello, Jason. Hello, everybody. So, clearly, I mean, as you know, what we had in the phase to be was for negative symptoms around 25 points at baseline.

12:49 And it is true that, I mean, we are monitoring, obviously, the phase. We're completely blinded by merging together all the patients who enter the study. And I have to say that... We are ending up with exactly the same entry score in terms of negative symptoms, which is obviously great news. I can even give you a little bit more granularity, telling you that what we see over the first 12 weeks during the double-blind phase in terms of the behavior and the dynamic of the negative score is really overlapping between the two studies, the phase 2B and the phase 3. Now concerning the The relapses, you know, there is again one point which is a debate about what is a relapse, but I mean, what I can tell you is that comparing again the Phase IIb and the Phase III, the level of relapses we can see is limited and is in line between the two studies.

13:52 Great. And then just one more from me. Can you Can you just speak a little bit to where you are in your commercial preparations and what your goals are to achieve throughout this year as you ramp towards a potential launch next year? So maybe I can give this over to Rick. So Rick, can you say some words for this question? Yeah, sure. So hi, Jason. Good morning. So a couple things here. So first of all, you may recall we've already – signed a commercial supply agreement with Catalan. So we'll obviously continue the work to be ready to have commercial supply available at launch. We've also received conditional approval from FDA for a trade name.

14:37 We haven't released that yet. We will sometime in the future. Once the data reads out positive, we'll enter more kind of formal dialogue with potential co-promote partners. There's a number of companies that already have established relationships within psychiatry here in the U.S. market. So I think we're quite interested to reach out and talk to some of those folks and see if we can essentially align with someone that has, you know, existing infrastructure and do a co-promote with someone like that. Great. Thanks for taking questions and looking forward to the data. Thank you, Joseph. Thank you. Our next question comes from the line of Joel Beattie with Citi.

15:23 Your line is now open. Hi. Thanks for taking the questions. The first one is on data integrity. You know, there had been an issue that came up around late last year. So I guess just to confirm, for the 362 patients that completed the double-blind study, have you reviewed that you'll have data on all those patients? Joel, yes, hello. Clearly no impact on data integrity, as I explained in one of the previous calls. You know, this mostly impacted the speed we could screen and include patients in the study or randomize patients in the study, but because we took all the precautions from the beginning to have, for example, two aliquots of blood samples on site, one sent it to be analyzed centrally and one kept on site.

16:19 I mean, we really did not experience any impact about what happened a few months ago. So clearly, very clearly, all these 362 patients can be fully analyzed. And maybe one word about COVID because I guess this is also a very hot topic. Also no impact of COVID as we mentioned regularly over the past Terrific. And I guess a question, given that there's two dosing arms, could you remind us of the stats plan? This is a great question. So, first of all, I mean, one interesting point is that even if it is not requested, we shared our statistical analysis plan with the FDA, yes, and we received a feedback which was already confirmed as a way we would like to analyze the data.

17:16 We will analyze the data because it's now becoming clear reality. But the statistical analysis plan is ITT. We're using the MMRM approach, and it is corrected for type 1 error with the Hochberg correction. So basically what it means is that for the primary endpoint, you're first doing the comparison Thank you very much. It's no longer P0.05, but it will be P0.025 in order to claim that 32 mg is significant.

18:12 So this is the strategy, which, by the way, was the same we used in the Phase IIb, yes, because, as you remember, the Phase IIb has been analyzed like a registrational study. Got it. Yeah, that makes sense. Maybe one last question on seltzer accidents. It sounds like you've had discussions with FDA on that program going ahead. If it does, could you tell us about how the costs would be split for the next part of development? I guess I give this over to Jeff. So Jeff, can you answer this question, please? Sure, yeah. The agreement's very clear in terms of each party's responsibilities with regard to funding the Phase 3 part of the program.

19:01 Back in 2016 we were required to amend the agreement that we have with Janssen as a result of European Commission intervention in connection with the European insomnia market and the Actelian transaction which J&J were seeking to get approval for at that time. But basically the amendment to the agreement requires Minerva to cover the full cost of the insomnia phase three program. J&J will give a $40 million contribution to the phase three insomnia program. And then on the other side, on the NDD program, we split the costs 40% Minerva and 60% J&J.

19:52 Great, thank you. You're welcome. Thank you. Our next question comes from the line of Barron Edmund with Jefferies. Your line is now open. Hi, guys. Thanks for taking my questions. So, Remy, in the press release, it seems that you have a 30% dropout rate. Is that how we should think about patients that have completed a trial versus enrolled? And whether How does this number compare to what your assumptions were for the trial design? And I guess were there any imbalances across the three arms in terms of dropout rate? So the last question I cannot answer because the study is blinded.

20:38 But the first one, the first part I can answer, yes. So the assumptions, if you remember, were 40%. Thank you very much. that completed the open label. I think you have 92 patients that have completed the open label extension. Can you tell us anything about these patients when they came into the open label versus when they exited?

21:25 Are you able to look at that data, given it's open label data, to see what the changes or benefits were in terms of negative symptoms in these patients? Sure, but just keep in mind that the patients who have been on 32 mg will stay on 32 mg, the patients on 64 will stay on 64, and if placebo patients are going into the open label, they are randomized to one of the two doses. So we don't know today what is the dose the patients have, but we know that they have no placebo, but we don't know which dose they have in terms of but yes indeed obviously we are following these patients as you know the primary objective of this extension is to tick the box of 100 patients exposed to the drug for one year so this is really the safety aspect but this is what you have to do to tick the box to go to the FDA so I think this is really extremely good news because we have still a lot of patients going on and we have already 92 have completed so I think we are really in good shape for kicking this box now we are obviously following these patients in terms of safety and efficacy and without having as much details as for the double blind phase I think that the things are behaving in terms of efficacy like it was in the phase to be as well so So far so good, yes, and very reassuring, I think.

23:00 Okay, and then maybe a question on self-reaction. What are the key gating items for starting the Phase 3, and do you anticipate starting Phase 3 this year? So, obviously, we recently had this end-of-phase meeting with our colleagues from Johnson & Johnson, and we got several feedbacks. So this meeting was obviously really concentrating but focusing on the MDD indication where I mean the key question was to know if these patients who are responding better with insomnia are the primary population. So this is a signal really clarified but was also a point of discussion without going more into the details was how do you quantify Insomnia.

23:50 Subjectively only, subjectively and objectively and all this has been clarified so we as we speak these protocols are adapted and finalized and the feasibilities are going on but as you know with the COVID pandemic the feasibilities are more complicated. So we are working on it and as soon as we are ready we will give you more details but so this is a Thank you very much. We have really a lot of things we can do inside the schizophrenia indication and, as you know, because negative symptoms are really this transdiagnostic symptomatology you will retrieve in several different disorders in the space of psychiatry and even neurology, we will obviously work on all this. As of today, we have put together the perfect world, and we end up with, I think, too many studies.

25:16 So we are currently discussing internally, taking lots of advice from some of our care workers of what would be the priorities to studies to do after top-line results. So stay a little bit with us. We are brainstorming. We are coming up with the best ideas. Thank you very much. obviously to work on the cell direction program, but also to move forward the other molecules in our pipeline. So a lot to come, but again, work in progress.

26:11 But I think we have a lot of clarity now, just priorities to be made. Great. Thank you. You're more than welcome. Thank you. As a reminder to ask the question, you will need to press star then 1 on your telephone. Our next question comes from the line of Miles Minter with William Blair. Your line is now open. Hi guys. Congrats and thanks for taking the questions. Remy, last time we talked just over a month ago, You may have mentioned that COVID-19 is not going to impact the top-line data, but potentially the open-ended portion.

26:57 I'm wondering, have you got any more clarity into the types of delays we may or may not expect there? And if there are, are these at US sites specifically, or are these broadened across the entire global nature of that trial? I've got a follow-up after that. Thanks. Yeah. Yeah, mate. Sorry. I guess what I said is that for the moment we have no impact on the extension due to COVID but obviously I cannot predict what will happen moving forward but as of end of last month, end of April we had no impact of COVID on the extension which is good news and I think we really put in place, so we have been extremely reactive. And I have to say that the guidelines coming out from the FDA and EMEA have helped a lot. But we have been extremely reactive with our CRO and with the sites to really implement all what is possible in order to continue the exploration in terms of safety and efficacy evaluation for the patients.

28:08 As you remember, I think we also discussed about the fact that we have in each country, we have enough drug in the country, so this will not have an impact to bring the drug to each patient who is in the extension and to each side, obviously. So, so far so good. We continue to monitor. We are very interactive. We obviously are using, again, the possibilities given by the EMA and FDA guidelines about, for example, remote monitoring, these kind of things. But, again, today we have no impact as we speak. Sorry, the last point about U.S. Sorry, I forgot this one.

28:53 Remember that, I mean, U.S. started before the European sides and Clearly, I mean, we have really a limited number of US patients who are still in the extension. So I think we will not have any problem in the US with the extension as well. So definitely, I mean, no impact in the US for the moment. So it would be fair to say that the 92 patients that have completed that extension phase, a significant proportion of them are indeed US patients. It's a mix, it's a mix, but I mean clearly the first one who have completed the 12 months, sorry, yes, definitely were coming from the US indeed.

29:39 Okay, cool. And then just on self-directed, curious in the press release you make mention that you're chasing this adjunctive MDD indication comorbid with insomnia, but you didn't mention about the insomnia program alone. So I'm wondering whether or not MDD is taking the priority here. Obviously Janssen plays a large part in that. And then obviously with MDD trials, placebo responses are crucial to the outcomes of those trials. I'm wondering whether the placebo response rates in patients that are comorbid with insomnia differ to those without MDD. and whether that's related to like background medications like Zolpidem and things like that that these patients might be taking coming into that potential trial.

30:27 Cheers. Great questions like always. So clearly I think the two indications are part of our objectives to move forward but I mean The insomnia data, I mean, in patients without any comorbidity, we are so clear. I mean, this is a straightforward process. I mean, clearly, remember, we had really very nice data in adults and in elderly, and we were better than standard of care, than Zolpidem, and the tolerability profile was excellent. So here, I mean, it's a quite easy path forward.

31:12 I mean, No really big surprise. Why it was a little bit more tricky obviously was with the NDD indication because clearly when you have a complaint of insomnia and NDD, clearly I mean the response is much better. There is no doubt about it. This is data driven. There is no doubt about it. I mean these patients are responding better. and when you're looking to the rate of response and the delta between treatment and placebo, I mean this becomes really very, very significant and very, very meaningful. I do not want to say clinically meaningful because I don't know if this is clinically meaningful but at minimum these patients are doing much, much better when they have insomnia and MDD.

32:01 So this is the reason why it took a little bit longer to think about all this Now, in terms of placebo response, I have not the final answer to your question because I think we did not. Best of my knowledge, maybe my colleagues in R&D did it, and we'll be happy to report if it has been done later. But I don't have any notion of having a different placebo response. As you know, placebo response is how you select the patients and how you run your trial. but I have no good knowledge about is there a difference but what is clear is that when you're looking again to the difference we have seen between treatment and placebo if the patients have insomnia in addition to their MDD disorder there is no doubt that we have a real graph effect here so I'm very confident that moving forward We will not really struggle with the placebo effect.

32:58 What is important, I think, to mention, and this is a much more general comment which is going beyond cell direction, is that I think with the current ongoing pandemic, I think the patients suffering from MDD have probably not the same phenotype than what we have seen before the pandemic, and I think we have to think also hard about what will happen after the pandemic, yes, because, you know, people are losing their job, people are More stressed, people are more anxious. So I think this is something we have to reconsider when we are running again the depression trials. But this is maybe another debate, a more general debate, but I think we are really considering this because I think it becomes important and maybe, maybe, and this is just expectation, the insomnia parameter will be even more important here to consider it.

33:52 That's fair. Thanks for the questions. You're welcome. Thank you. Our next question comes from the line of Douglas Bell with HC Wainwright. Your line is now open. Hi. Good morning. Thanks for taking the questions. Just quickly, in terms of how long do you think or, you know, once you get to 100 patients, which it seems imminent in the extension, how quickly would you be in position to file the NDA for Roloperidone, just given the timing of the readout for Phase 3. Thank you. Doug, you know, this, as you know, I mean, it's not ethical to stop any patient if he stays into the trial until the end of the 12 months. So, basically, some of these last patients who have completed the double-blind phase ended into the extension, so so if these patients are staying in the nine months following the double blind phase to tick the box of 12 months they will go to the end and so the extension data we will get how many we will get, probably we will get much more than the 100 we need to tick the box about safety but the extension has to be completed so this will happen beginning of next year in the first quarter or so so clearly we cannot change this as but so what we will do as you know and this is now becoming more and more common is that

35:22 the FDA is really very open to have this kind of pre-NDA meeting and we are exchanging on a regular basis with the FDA and when we have the top line results we will obviously share this with the NDA discuss it with the NDA and my colleague Jess who is in charge of R&D has really worked a lot and we have a lot of outputs in addition to the Thank you. This concludes today's question and answer session. I would now like to turn the call back to Remy Luthringer for closing remarks.

36:20 Yes, thank you so much. Thank you everybody for listening to our earnings call. It is obviously a very important moment for the company. We are very close now to the readout of a lot of work, a lot of hope for patients and hopefully a lot of value creation for for our shareholders. So I am really looking forward to update you very, very soon about our Phase 3 results. Thank you all and have a very nice day. Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect. Have a great day.