Intra-Cellular Therapies, Inc. (NASDAQ:ITCI) Q2 2023 Earnings Call Transcript

Intra-Cellular Therapies, Inc. (NASDAQ:ITCI) Q2 2023 Earnings Call Transcript August 3, 2023

Intra-Cellular Therapies, Inc. misses on earnings expectations. Reported EPS is $-0.45 EPS, expectations were $0.62.

Operator: Good morning. And welcome to Intra-Cellular Therapies Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to turn the conference over to Dr. Juan Sanchez, Vice President, Corporate Communications and Investor Relations. Please go ahead.

Juan Sanchez: Good morning and thank you all for being here today. Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Mark Neumann, Chief Commercial Officer; Dr. Suresh Durgam, Chief Medical Officer; and Larry Hineline, Chief Financial Officer. As a reminder, during today’s call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties that might cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports.

You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligations to update such statements. I will now turn the call over to Sharon.

Sharon Mates : Thanks Juan. Good morning, everyone. And welcome to today’s conference call. Today I’m pleased to share our second quarter results, which consistent with past quarters continue to demonstrate high demand for CAPLYTA. In Q2, CAPLYTA total prescriptions increased by 96% compared to the second quarter of 2022, an increase 13% sequentially compared to Q1 2023. Second quarter total revenues increased to $110.8 million, CAPLYTA net sales increased to $110.1 million, a 100% growth versus the same period in 2022. CAPLYTA continues to be extremely well received by healthcare providers and patients. In recognition of our robust performance to date and our confidence in continued growth. We are raising our CAPLYTA full year 2023 net product sales guidance range to $445 million to $465 million from our previous guidance of $430 million to $455 million.

Since CAPLYTA’s launched, we’ve built a solid foundation, with growth coming from increasing the breadth of our prescriber base, as well as increasing the depth of prescribing. This is a reflection of the confidence that prescribers have gained in their real world use of CAPLYTA and the benefits their patients are experiencing during treatment with CAPLYTA. Mark will further discuss our commercial efforts later on in this call, and will describe how we will continue to build on CAPLYTA success. We continue to develop lumateperone for other disorders and advanced the rest of our pipeline. Let’s start with lumateperone breadth of positioning in mood disorders. We are very pleased with the positive reception that are mixed features study, Study 403 has received from leaders in the psychiatry community and equally excited about the drug’s potential to help large numbers of patients.

As a reminder, in this study, lumateperone 42 mg was statistically significant on the primary endpoint of symptom reduction on the Montgomery Aspirin Depression Rating Scale, or MADRS for the combined mixed feature patient population of MDD and bipolar depression and the individual patient populations of MDD with mixed features and bipolar depression with mixed features. The robust effect sizes range from 0.64 to 0.67. Starting in September, we will be presenting results from Study 403 at major psychiatry meetings. We also plan to submit a manuscript describing the 403 results in the second half of this year. We’ve been analyzing Study 403 results and refining our regulatory and commercial strategy. Last week we plan to meet with the FDA later this year and discuss this important program with the agency.

We continue to analyze Study 403 data and today we’d like to share with you an important post hoc analysis we conducted of a pre specified patient population, as this analysis even further strengthens our confidence in CAPLYTA’s potential as a treatment for MDD and other mood disorders. At entry into the study, we documented the patient population presenting with anxious distress, commonly known as anxious depression, using DSM-5 criteria. Anxious distress is a specifier in the DSM-5 and refers to the concomitant presence of anxiety symptoms during a current episode of depression. Our analysis shows that the antidepressant effects of lumateperone in patients with mixed features and anxious distress were robust. In Study 403, lumateperone significantly improved MADRS total score compared with placebo in the combined MDD and bipolar depression mixed features population with anxious distress with a mean difference versus placebo of 6.1 point, a robust effect size of 0.67 with a P value of less than 0.0001.

Additionally, each patient population of MDD and bipolar depression patients had robust results. We plan to present the detailed analysis of these data at a medical meeting later this year. It is estimated that about 55% of patients with MDD experienced anxious distress and a similar rate is estimated for bipolar depression. The presence of anxious distress is associated with treatment nonresponse, higher suicide risk and longer duration of illness. This important analysis showing robust antidepressant effect to lumateperone in patients with mixed features and anxious distress as another line of evidence of CAPLYTA’s potential across the spectrum of mood disorders. In total, we have shown lumateperone has any depressant effects in different patient populations, with mood disorders, including those with schizophrenia with comorbid depression, bipolar depression, mixed features, and both MDD and bipolar depression.

And now in anxious distress in both MDD and bipolar depression. These patient populations are known to be difficult to treat, and are more costly to the healthcare system. Let’s now turn to our new lumateperone on adjunctive MDD clinical program. We have three ongoing Phase 3study, Study 501, 502, and 505 in our registration program, evaluating lumateperone as an adjunctive treatment for MDD in patients who partially respond to any depressants, as has been our practice, as we approach completion of clinical studies, we provide guidance on the expected time, timing of top line results and filing of our sNDA with the FDA. We are now at this point the conduct of our first two adjunctive MDD trials. We expect top line results from Study501 in the first quarter of 2024, and results from Study 502 in the second quarter in 2024.

Subject to the results of these studies, we anticipate filing our sNDA in the second half of 2024. As you can see, we are excited about our adjunctive MDD program and CAPLYTA’s broad potential across mood disorders. Our optimism is based on multiple lines of evidence including the mechanism of action via the interactions with the dopamine, serotonin and glutamate systems and strong clinical evidence supporting the antidepressant effects of CAPLYTA across different patient populations. We also continue to study our new Lumateperone Long Acting Injectable formulations. We expect to initiate Phase 1 single ascending dose studies with several new formulations of our LAI later this year, and expect these studies to continue through next year. This is a key step in developing Long Acting Injectable formulations that are effective, safe and well tolerated with treatment durations of one month or longer.

Turning to our pipeline, 1284 is an important program for the expansion of our neuropsychiatry franchise. This year, we expect to initiate Phase 2 programs evaluating ITI-1284 in generalized anxiety disorder in psychosis in patients with Alzheimer’s disease and agitation in patients with Alzheimer’s disease. We are committed to building our neuropsychiatric franchise through ongoing R&D efforts. Today, I’m pleased to introduce our new program. ITI-500, this program is focused on development of novel non-hallucinogenic psychedelics. As you are aware, interest has reemerged in the potential of hallucinogenic psychedelics for the treatment of mood and anxiety disorders. However, adverse effects of these hallucinogenic psychedelics have raised safety issue, including abuse liability, cardiac pathology related to 5-HT2a receptor agonism hallucinations due to 5-HT2a agonism and persistence of perceptual disorders that may limit broad use.

Our chemists have developed novel compounds that allow the safe exploration of the full therapeutic potential of this new drug class. Compounds in this program, which we call the ITI-500 series, interact with the serotonergic 5-HT2a receptors in a unique way. In animal models of neuropsychiatric disorders, these compounds retain the beneficial effects of psychedelics while lacking liabilities of known psychedelics, including hallucinogenic potential, and cardiac valvular pathologies. Our lead compound in this program, ITI-1549, possesses this desirable pharmacologic profile, and is currently being evaluated in IND enabling studies and expected to enter human testing in late ‘24 or early 2025. We plan to present data on this program at upcoming scientific conferences, and we look forward to sharing this data with you.

We also plan to discuss this program in an upcoming R&D Day, which we expect to hold later this year or early next year. Turning to our PDE1 inhibitors platform, patient enrollment is ongoing in our Phase 2 clinical trial of Lenrispodun which evaluates improvements in motor symptoms, changes in cognition, and inflammatory biomarkers in patients with Parkinson’s disease. For ITI-1020, our cancer immunotherapy candidate, our phase 1 single ascending dose study is ongoing, evaluating the pharmacokinetics safety and tolerability of different doses in healthy volunteers. Lastly, we also have ongoing studies of ITI-333, for the treatment of opioid use disorder and pain. We have completed the single ascending dose study and we are presently engaged in the multiple ascending dose study.

And in the PET study looking at receptor occupancy. We look forward to sharing the results of the single ascending dose study later this year, and the multiple ascending dose study in 2024. The company is in a strong financial position, ending the second quarter with approximately $515 million in cash, cash equivalents and investments, securities and no debt. We’re very proud of our performance which has enabled us to serve patients and expand our development programs. We are pleased to be delivering transformative care to patients with neuropsychiatric conditions. We look forward to continuing to share our progress with you. I will now turn the call over to Mark to share additional details on CAPLYTA’s performance this quarter. Mark?

Mark Neumann: Thanks, Sharon. Good morning, everyone. It’s great to be with you all today. 2023 continues to be an exceptional year for CAPLYTA. We’re successfully implementing our commercialization strategy and delivering robust growth as we further penetrate both the schizophrenia and bipolar depression markets. During the second quarter, our commercial team drove strong growth, increasing total prescriptions 96% compared to the same quarter last year, and 13% sequentially versus Q1 of this year. We expect the strong performance to continue into the second half of 2023 providing the confidence to increase our full year net product sales guidance and importantly, positioning CAPLYTA for consistent growth in the coming years.

During the launch of a new indication, it’s important to consistently add new prescribers as well as increasing the number of prescriptions for each prescriber. During the second quarter, we continue to increase both the breadth of our prescriber base and their depth of prescribing. We again added nearly 4,000 new first time prescribers of CAPLYTA during the quarter increasing the cumulative total number of prescribers since launched to over 29,000. Weekly new pay patients start with CAPLYTA continue to be at a level 5x to 6x higher than they were before we expanded our label into bipolar depression. Earlier this year, we implemented two key initiatives designed to further expand both the breadth and depth of our prescriber base. First, we added 50 new neuroscience sales specialists to our team during the first quarter.

And this has enabled us to interact more frequently with our highest volume prescribers and reach even more new prescribers. We are very pleased with the productivity and progress made thus far by this selling team and expect their contribution to the growth of CAPLYTA to further expand in the second half of the year. Second, we launched a new direct-to-consumer national advertising campaign to raise awareness of bipolar depression, and to educate prescribers and patients about the potential benefits of CAPLYTA. The campaign is generating significant patient interest and requests for CAPLYTA, as well as raising brand awareness among prescribers. We are pleased with the impact that the campaign is having, and we’ll be continuing these efforts throughout the second half of the year.

We also continue to enjoy broad market access coverage across all three payer channels. And we’ll look to continue to execute our market access strategy with the objective of optimizing uptake and value creation. These efforts are supported by our [inaudible] Patient and Prescriber Support Program which has been very effective in helping patients access CAPLYTA. In some way, the first half of 2023 has seen a continuation of the exceptional launch of CAPLYTA’s bipolar depression indication, and we see strong momentum heading into the second half of the year. We believe that CAPLYTA has a compelling product profile and provides substantial benefits for patients with schizophrenia and bipolar depression. I’m very proud of the strong commercial execution of our salesforce and the broader commercial team and look forward to continued success in the marketplace.

Now I’ll pass the call over to Larry to walk through our second quarter financial performance. Larry?

Larry Hineline: Thank you, Mark. I will provide highlights of our financial results. Total revenues were $110.8 million for the second quarter of 2023, compared to $55.6 million for the same period in 2022. Net product sales of CAPLYTA were $110.1 million in the second quarter of 2023, compared to $55.1 million for the same period in 2022, representing a year-over-year increase of 100%. In the second quarter CAPLYTA net sales increased 16% sequentially over the first quarter of 2023. This strong growth was primarily driven by a 13% quarter-over-quarter increase in total prescription demand. In the current quarter, the increase in product sales was driven by strong demand for CAPLYTA, with minimal impact from changes in days on hand and gross to net.

We expect that gross to net percentage to nominally increase for the remainder of the year and remain in the low 30s for the full year 2023. Due to increasing demand for CAPLYTA and strong operating performance to date, we’re raising our CAPLYTA full year 2023 net product sales guidance range to $445 million to $465 million from our prior guidance of $430 million to $455 million. Selling, general and administrative expenses were $101 million for the second quarter of 2023 compared to $100.3 million for the same period in 2022. Research and Development expenses for the second quarter of 2023 were $49.8 million, compared to $38.5 million for the same period in 2022. For 2023, we continued to estimate full year SG&A expenses to range between $420 million and $450 million and full year R&D expenses to range between $195 million and $220 million.

Our financial position remains strong. Cash, cash equivalents, investments securities in restricted cash total $514.6 million at June 30, 2023. This concludes our prepared remarks. Operator, please open the line for questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Andrew Tsai of Jefferies.

Andrew Tsai: Hey, good morning and congrats on the great quarter. Appreciate all the updates. So maybe just to talk about the guidance raise. what are the core assumptions that drove you to raise it? For instance, to the top end of guidance imply more benefit on the volume or more benefit on the price side? Same question goes for the lower end of revenue guidance. And secondly, I think last year, there was some summer seasonality for CAPLYTA, though it also applied to many neuro drugs in particular. So, are you seeing that same phenomenon this year so far? Or is that going to be more or less pronounced in Q3 this time? Thank you.

Sharon Mates: Great. Hi, Andrew. Thanks for your questions. Maybe Mark, do you want to start and then Larry, if you have anything to add?

Mark Neumann: Yes, sure. Andrew, thanks for the question. Yes, I would say the range of our guidance is based on the trending that we see in the strength in the first half of the year, the trajectory of our prescription volume, and it’s just some variation around those trends. I think each end of the range indicates continued strong growth in the second half of the year, as both Sharon and Larry said in their initial remarks, the second quarter improvement was definitely driven by strong volume gains with minimal impact from inventory days on hand and from gross to net. Regarding your summer seasonality. Yes, each year, we do see some summer seasonality in third quarter, and then we tend to see a stronger fourth quarter. So Larry, I don’t know, if he had anything else to add.

Larry Hineline: No, I think you hit all the high points, Mark.

Operator: Our next question comes from the line of Marc Goodman of Leerink.

Marc Goodman: Good morning. Can you talk about the LAI program for one second, it seemed like you were moving forward, you had a formulation that you liked. And now you’ve gone back and you’re working on a different formulation. So is this because you’re working on a longer acting one this time? I’m just kind of curious, like, just the big picture, where we’ve been? Where are we moving on that? And then just a quick question on 1284, this additional tox studies that you have to do, are they going to slow you down from the rest of the work? Can you just do all of that work in parallel? I’m just curious if the FDA is making do that before you move on? Thanks.

Sharon Mates: Okay, let me start this, thanks for your questions, Marc, this is Sharon. And let me start with the LAI. And you got it absolutely correct. We did a study with one formulation of an LAI, which would be a one month formulation, we do believe that we could tweak that. I mean, that’s still a contender. But we do believe we can tweak that formulation with others. And we’ve developed other formulations as well. And those are what we’re testing. Because we do believe that we want to have a formulation that is also longer than a month. And that in fact, maybe even better than the formulation that we first developed. And that’s why we have all these other formulations that we’ve been — that have been in development. As to 1284, the tox studies have been ongoing.

I guess what I would say is what we’re doing other is other studies in the meantime. So that in total, the program would not be slowed down. It’s just being done with different studies coming first. And I mean, we’re actually pretty excited that it is deemed to be a new molecular entity, which has required us doing the further tox package.

Operator: Our next question comes from the line of Brian Abrahams of RBC Capital Markets.

Unidentified Analyst: Hi. This is Allen on for Brian, thanks for taking our question. I guess I had a question on the anxious depression of group from the study you talked about? Can you talk about the rationale focusing on this subgroup of depressed patients rather than others such as an endodontic depression for instance. And are you contemplating a potential opportunity for CAPLYTA an anxiety indication? Can you talk about any potential commercial work or future development paths, that could be the implications from the anxiety work you’ve done. And I guess 1284 is also being explored in general anxiety, I guess, an increased confidence in the success of that from the CAPLYTA work. Thanks.

Sharon Mates: Great, Hi, Allen, maybe, Suresh, would you like to take that? And I think maybe, first, if you would, maybe remind everybody what anxious distress is and why it’s so important to look at.

Suresh Durgam: Yes. So anxious distressed by DSM-5 definition is having a presence of at least some anxiety symptoms is basically at least two symptoms of following five symptoms. One is feeling tense, or feeling unusually restless, having difficulty concentration because of worry, fear that something awful may happen, or feeling that an individual might lose control of these symptoms if they have at least two in the presence of a depressive episode, that is considered patients meeting depressive episode with anxious specifier. So the reason why this is clinically important is patients who have major depressive disorder and have some symptoms of anxiety. Here we are calling based on the specifier anxious distress are they poorly respond to medications, especially the antidepressant.

And this has been shown in the study. And also these patients, the remission is less likely in these patients, it also takes longer time for these patients to be treated. And that’s why step is clinically important. Coming to our study, Study 404. We have studied both bipolar depression and major depressive disorder with metformin. And then we have added also looked at prospectively, we have looked at patients who also met criteria for anxious distress. And this analysis that we are discussing today is looking at that sub population where you have shown strong efficacy both in the overall population of both combined populations and also in individual populations.

Sharon Mates: To answer you, with regards to why did we do this, it’s because anxious distress is so highly prevalent amongst all patients who have major depressive episodes. So we thought it very important to look at this patient population.

Suresh Durgam: And I would add one more thing that there was a question about, does it increase your confidence, I would say that this also shows that lumateperone has demonstrated efficacy in a wide range of mood disorders space. So this also adds to that.

Operator: Our next question comes from the line of Charles Duncan of Cantor Fitzgerald.

Charles Duncan: Okay, yes, thanks for taking the question. And congratulations on a really nice quarter. Sharon, and team, lots of updates as well, so many questions, but I’ll just limit mine, really to commercial. One is we know prescription volatility in the prescription trends seems to be lessening over time. And I guess I’m wondering if you can speak to that being a function of more consistent new patient adds or persistence that you’re seeing. So more refills over time. And I guess a follow on to that question is, when you think about depression versus mania in bipolar, what kind of feedback are you getting from prescribers in terms of the relative importance, it would seem to me that the depression part is more important, and therefore the impact of new mechanisms that could be coming, that focus more on mania or psychosis? Maybe not so impactful, can you speak to those two questions?

Sharon Mates: Maybe we’ll take the second question first. Because I think that’s a very important point. And maybe Suresh would want to expound upon this. But yes, most patients with bipolar disorder spend most of their time in a depressed episode, so I don’t know Suresh, do you want to go a little further into that as a psychiatrist?

Suresh Durgam: Yes, again, you predict bipolar disorder, you have both folds, manic fold and the depressive fold l. And about close to 80% of the time, the span is being depressed, you have, of course, manic episodes into spread during that time period. But most of the time they are in depressed phase. So that’s why it becomes more important to look at medications and help patients in that space.

Sharon Mates: And most of the anti-psychotic or many I should say, the anti-psychotics do help in the manic phase, but they do not many of them have been shown to not have any effect in the depressive phase. And that’s why it’s another reason it’s so important to have drugs that are treating the depressive phase. Now back to your first art, which I hope Mar, you remember the question on the commercial?

Mark Neumann: I do. And it’s a good question, Charles. And yes, we have been very pleased with the how consistent and impressive the trajectory of our volume growth has been ever since we launched the bipolar depression indication. And I think that I know that both new patients start, the strength that we’re seeing there, as well as good persistency are contributing to the trajectory that we see. And I think, in terms of the volatility, it’s an interesting observation. And I think it’s probably due to the fact that we continue to add new prescribers, we’re up over 29,000 prescribers of CAPLYTA now. And now, and on average, each of those prescribers are prescribing more each quarter-over-quarter. So that tends to take away some of the volatility that you see earlier on in the launch of a new product for a new indication. And I think we should continue to see that in the future as well.

Operator: Our next question comes from the line of Jason Gerberry of Bank of America.

Jason Gerberry: Hey, guys. Good morning. And thank you for taking my questions. For me just a question sharing, interesting, the non-hallucinogenic psychedelic program, I was curious if you can expand upon maybe what you guys do to strip out some of the hallucinogenic properties of that molecule, which seems like kind of a long standing unmet need with that approach.

Sharon Mates: Thanks, Jason. And I’m just going to start and give you like a global overview. Then I’ll ask Suresh, if he wants to contribute anything. And then on our R&D Day, we’ll have the scientists who actually develop these molecules, and we’ve been developing a series of molecule and it started with our deep knowledge of the 5-HT2a receptor and that space. So we took of 5-HT2a a core, and we they, and when I say we, it’s the [inaudible], because I deserve no credit for this, it’s are really are terrific chemists, and biologists who they took the 5-HT2a and took a core, and they modified around that. And then of course, they wanted to build in other properties, they wanted to make sure we didn’t have to be agonism. So, because of the adverse event profile, and so they have spent several years on this series of drugs, modifying continuously going into animal models, looking for things are very important proxy for hallucinations in a rat.

So in preclinical models, it’s difficult to see hallucination. So you have proxies, and head twitch is the most common proxy. So they would take these molecules, put them through this battery of behavioral tests, and then come back with the modified molecule and that’s how they’ve come up with a series of molecules now that go anywhere from molecules that do not have any head twitch and have other desirable properties all the way through the gamut of where you can bring in a side effect profile and you can exclude a side effect profile. So that’s been sort of that’s about a couple of years’ worth or several years’ worth of preclinical studies, including chemistry, a lot of chemistry. And as I said, we’ll go further into it when we will tell you more about 1589.

And about some of the other, they have actually five molecules that they’re looking at, but 1589 is the — is a lead molecule.

Operator: Our next question comes from the line of Jeff Hung of Morgan Stanley.

Michael Riad : Hi, this is Michael Riad on for Jeff Hung. Thank you for taking our questions and congrats on the quarter. I just want to follow up on a previous comment on how often do patients with a major depressive episode develop anxious distress? And what is the percent overlap between mixed features and anxious distress? I guess I’m wondering how many more bipolar depression patients would be eligible to benefit from the therapy that also shows benefits on anxious distress? Thanks so much.

Sharon Mates: Sures, do you want to take that?

Suresh Durgam: Yes. So in terms of anxious distress, again, the importance of anxious distress is these patients are have poorly responding to antidepressants. And that’s why we looked at this. And if you’re talking about the percentage of people, approximately 55% of major depressive disorder patients and bipolar depression patients have anxious distress, and this number varies to even much higher numbers, but approximately about 55%. And then there is, of course, an overlap between these two, patients who have mixed features can also have anxious distress, overlapping. And it is understood that there are some patients who just have one or the other. And there’s also a significant portion of overlap between these two patient populations.

Sharon Mates: Yes, so it’s very difficult to come up with a good number of the overlap, because there haven’t been all that many studies. And just mix patients, we do know that a large percentage over and the literature has a couple of different numbers. But we’ve used the most conservative numbers of 55% of patients with MDD and bipolar depression have anxious distress. So your question is, are there more patients within MDD, and outside have mixed features that have anxious distress? I think that’s your question. And the answer to that is yes. Additionally, there are patients with mixed features who don’t have anxious distress. And there are obviously a lot of patients with mixed features who also have anxious distress. So maybe for our next call, we’ll have a Venn diagram.

And we’ll map out exactly the overlap as we see it. We have been working very hard to get. I mean, it’s a great question, we have been working very hard to get very clear numbers. Again, this is not field that has been very well studied. And I should tell you an anxious distress that the studies that have been done by enlarge, have not succeeded. So again, it makes it even more difficult to really tease out exact numbers. But we do know from, we’ve given you the published data, and again, the conservative numbers in the published data, which tell you that about 55% of patients with MDD and bipolar depression have anxious distress. And in fact, the other numbers are much higher even.

Operator: Our next question comes from the line of Sumant Kulkarni of Canaccord Genuity.

Sumant Kulkarni: Good morning, Nice to see all the progress and thanks for taking our questions. I’m sorry if I missed this, but what is the latest in terms of your timeline on potential interactions with the FDA on your mixed features and depression program given you have one very good Phase 3 results in hand, or do you prefer to wait until you have the adjunctive trial results as well? And do you expect to specifically discuss anxious depression during traction?

Sharon Mates: Yes, so the simple answer for you is no, we’re not waiting for anything other than we have been waiting for the CSR on the report, in other words, the clinical study report with all of the data on the mixed feature study, and we did say in our prepared remarks that we will be going to the FDA later this year, and discussing our program with them. And that’s still the case.

Sumant Kulkarni: Got it. And do you expect to discuss anxious depression as part of that as well?

Sharon Mates: Yes, well, we’ll be discussing the whole study, I think that that we, again, we really don’t comment prior to going to a meeting about the particulars in a meeting, but we’ll be discussing, it’s very, as you can see, it’s a complex program. And we’ll have discussions on the program.

Operator: Our next question comes from the line of Corinne Jenkins of Goldman Sachs.

Corinne Jenkins: Yes, maybe a quick follow up on a portion of patients that have anxious depression, it would be helpful to understand what portion of the trial that was enrolled, and had these patients kind of have in the baseline patient characteristics. And then I have a couple of follow up questions.

Sharon Mates: Suresh?

Suresh Durgam: For the patients with in the whole study, we had about close to 60% of patients who had anxious distress.

Corinne Jenkins: Okay, that’s helpful.

Sharon Mates: And again, that matches the literature. I told you we’ve given you this very conservative number. They range anywhere from about 50% up to over 70% or 80% of patients in MDD and bipolar with anxious distress.

Corinne Jenkins: Okay, great. And then maybe, separately, how should we think about the cadence of R&D spend into next year, particularly as you ramp on some of these expansion studies? And do you consider yourself sufficiently funded through the CAPLYTA revenue to pursue those opportunities that you see at hand?

Sharon Mates: So I’ll take the second part. And that is yes, we do consider ourselves sufficiently funded to progress every program that we’ve been mentioning to you on today’s call. And I think we haven’t given you guidance into next year. But I’ll ask Larry, did you want to add anything to that?

Larry Hineline: No, I think, we were going to, we’re going to stay within the guidance that we gave you for this year. And as you can see, by the results of the first half, that we’re on pace to be within those that the guidance numbers, but again, like Sharon said, we’re not in a position to be giving 2024 guidance at this point for R&D.

Operator: Our next question comes from the line of Ash Verma of UBS.

Ash Verma: Hi. Thanks for taking my question. And congrats on the progress. So just on MDD , can suppliers past onset of action, translate into similar benefits in the MDD setting. And just for the study like the any DDI that you will be watching out for when you combine it with the other antidepressants, things.

Sharon Mates: So I didn’t hear — I couldn’t hear the first part of your question. I heard you’re asking about any drug interactions that we would expect to see. CAPLYTA, I’ll start with that. And then I’ll turn it over to Suresh and we might — we may need to ask you to repeat the first part of your question. But to date in all the studies we’ve done, we have not had any issues on DDI. So as I said, I could not really understand what you were asking. You can’t do — maybe Would you repeat the whole question and then I’ll ask Suresh to take it, please.

Ash Verma: Sure. So yes, what I was asking when can suppliers fast onset of action, translate into a similar benefit in the MDD setting.

Sharon Mates: You’re asking if the — is there a fast onset of action? Right. And, again, I’ll just start and I’ll turn it over to Suresh. In our bipolar studies, what we saw was an onset of action, either in the first week, or certainly by the second week, and we don’t measure in between our time points, or at one weekend at two weeks. I don’t know, Suresh, do you want to go into that any further or?

Suresh Durgam: Yes, no, I think the obvious we measure is one week, and we have seen in some studies as early as one week, or at least two weeks, within one to two weeks, we have seen efficacy so far. And in terms of the drug interactions, even MDD program, again, the studies are ongoing. So right now we have not seen any new safety issues in ongoing studies exactly say no issues with DDI.

Operator: Our next question which comes from the line of David Amsellem of Piper Sandler.

David Amsellem: Hey, thanks. So I’m just coming back to the LAI development program. My understanding is that LAI are mainly used in schizophrenia and mania. So I’m just wondering how you see an LAI commercially in the context of a drug like lumateperone where it’s primarily used in depressives? How are you thinking about that? And then secondly, lots going on with the pipeline. And I’m just wondering out loud, are you exploring any potential outlines and things or partnerships? And just how are you allocating resources? In other words, just talk about prioritization beyond lumateperone. Thank you.

Sharon Mates: Okay, I may need, I think you have a few questions in there, David. So I may need to ask you to repeat some of them. But let me start with your first point, because that’s where I got hung up where you said, when the lumateperone is used mainly in depressives, I don’t believe that’s a correct statement, lumateperone is very broad based. And yes, we’ve been showing it to be effective in several patient populations with mood disorders. Mood disorders, is a very large patient catchment, schizophrenia, where we also showed efficacy. We do have robust sales within the schizophrenia patient population as well. But the schizophrenia patient population is just a much smaller patient population than a bipolar patient population et cetera.

We haven’t done the studies in mania, but we do have patients who are on lumateperone for the treatment of bipolar depression. And they are neither in our short term clinical trials, nor in our long term clinical trials, nor and we’ve measured everybody for the YMRS. They haven’t slipped into and they haven’t become manic. So they don’t have mania. So I would tell you, that as I’ve said in our earlier remarks, that many of the drugs that many of the anti-psychotics work for manic episodes in these disorders where they don’t work is in the depressive episodes. So I just wanted to clarify that. As for the lumateperone LAI, we are developing the LAI, right now for the treatment of schizophrenia. We may broaden that in the future. But our first indication is for the treatment of schizophrenia.

When we started the program, we actually didn’t have the database that we now have on the safety of oral lumateperone, so we do think that oral lumateperone will continue in its trajectory. We think the injectable lumateperone, there are — is for really a couple of different patient populations within schizophrenia. Either these who, for one reason or another don’t want to take an oral drug, or they won’t comply with an oral drug. And so they need to be on an injectable. And that’s really how that program is progressing. We do think that it is a reasonable approach. And we think that it’s an important approach for patients. We don’t think it’s going to take over half the market. But we think it’s an important option for patients to have. Then I think your other questions, were on BD.

Is that right? On in licensing and out licensing? Is that correct?

David Amsellem: Yes, and how you’re prioritizing your earlier stage programs?

Sharon Mates: Well, I think the programs we’ve described to you. So frankly, we have other internal programs as well, they, I think we describe programs to you. Typically, in the past, once they’ve been in the clinic, we’ve now told you about the non-hallucinogenic psychedelics, because they have been moving into the clinic, and we’re very excited about the data that we’re getting there. I think, it’s kind of like, when I got this question. It’s for those who have children, which child do you like best? We like all our children. And I think that I think we are well capitalized. And for every program that we’ve described to you, we have sufficient funds to keep moving these programs forward. So I think that the answer I would give you is that each one of these programs is moving forward on its own trajectory.

Now, of course, as they move forward, they become more and more expensive. And maybe at some point, one decides that you should be either partnering some of these or not. And of course, depending upon the clinical data that you get, you make those decisions, and at some point, one will be, some will be prioritized over others as they get into the later stage of their development. Right now, I will summarize for you, we’re moving them all forward.

Operator: Our next question comes from the line of Umer Raffat of Evercore.

Umer Raffat: Hi, guys, thanks for taking my question. There’s some construction next to my cube. So apologies for any noise and/ or salsa music. Two questions really quick on the anxious distress. Do you think FDA label at any point may speak to some of that data? Is that your base case expectation? And also, were there any endpoints that were more anxiety specific, for example, anxious depressive attacks, or the Liebowitz scale et cetera. That was evaluated for that subgroup? Thank you.

Sharon Mates: Okay, hi, Umar. Thanks for the questions. I was stuck on the salsa music, I am kind of not sure I got all the questions, however, maybe I’ll let Suresh speak to the anxious distress and your other questions.

Suresh Durgam: Yes, in terms of this particular study, we have looked at predefined patient population where we have looked at from a DSM-5 prospective patients who have met the criteria for anxious distress and what we are looking there was looking at the depressive symptoms in this patient population. And in terms of specific scales for anxiety we have not studied in this particular study.

Sharon Mates: And in terms of FDA label, remember what we’re measuring in this study is those patients whose depression scale was improved as a result of their diagnosis of having anxious distress. So their MADRS scores were improved and within the MADRS there are questions on anxiety and yes, we improve those but the, so it’s a — this patient population what you want to be doing is a improving their depression scores. So and that’s what we were looking at in these studies in that patient population, and where they are better off at the end than they were in the beginning? And the answer is clearly yes. And again, we’ll have more to say about that as we go forward.

Operator: Our next question comes from the line of Ami Fadia of Needham & Company.

Ami Fadia: Hi. Good morning, thanks for taking my question. Maybe a follow up on anxious distress. Can you talk about the current sort of physician practices around maybe diagnosing patients for anxious distress? And if they treat these patients any differently from the broader patient population? Thank you.

Sharon Mates: Suresh, do you want to take that?

Suresh Durgam: Yes. In terms of anxious distress, I would like to go — before we go to the question, at least explain why this is important. And the reason why this was even put in this was introduced into the DSM-5. Before anxiety symptoms, the recognition of this was coming mainly from the STAR*D trial, where when they looked at patients with MDD, they found that patients who also had this anxious depression, anxious distress symptoms, were not responding to your antidepressants, SSRIs and SNRIs. So including that in this will give caution to prescribers and physicians prescribing to pay attention to that discomfited population. And why is that important? It’s important because then you can make treatment decisions, because these are the patients who don’t respond to SSRIs or SNRIs. And maybe give them a signal that you need to look for something else for these patient populations.

Right now, there is no treatment, specifically approved for this patient population. Hence, any new medication that comes with that or demonstrate value in this patient population is welcome. And that’s what we have done in this particular case.

Sharon Mates: In addition, these patients receive polypharmacy and oftentimes with very poor response to it. And they are a high burden on the healthcare system, as well as non-responders to be more traditional therapies. So it is important to be able to identify a patient population and see what drugs can help them. And that was what our aim was by adding that patient population, just a description of that patient population and measuring how they do in the study. That was the importance of putting that into the study.

Operator: Our next question comes from the line of Graig Suvannavejh of Mizuho Securities.

Graig Suvannavejh: Hey, thanks for taking my question. Congrats on the progress. Also, thanks for the guidance around the timing of the Study 501 and 502. I had a question on Study 505, which has to do just with study design, on clinical trials.gov it does seem that the study design and the sample size is almost exactly the same as Study 501 and 502. So I just wanted to confirm that. And also, just from a timing perspective, it does look like there might be a slight difference in terms of how long from start to end, that study is going to take relative to 501 and 502. I think 501 and 502, were about 25 months as listed from start to end. I think 505 is 29 months from start to end. And so I’m just trying to get a sense of whether that is due to kind of where we are today and trying to enroll MDD studies or if there’s some other nuance. Thanks so much.

Sharon Mates: So maybe I’ll add — maybe I’ll just say Suresh, if you could just explain Study 505. I think for some people on the phone they may not even know what Study 505 is. So if you could identify what Study 505 is, and then take it from there.

Suresh Durgam: Yes, this program is looking at adjunctive treatment of major depressive disorder on patients who have partially respond to antidepressants, so our program both 501 and 502 studies are ongoing. And then we have added 505 starting up this year. And this in design is very similar to the 501 and 502, it is a six week, double blind placebo controlled study, primary endpoint is Modra, sort of score, secondary endpoint is CGI. So in that sense, it is very similar. No difference. And so this study was started. And it’s going to be, I think the one other question was, how long it takes?

Sharon Mates: I think that I don’t know. Sorry, I don’t mean to cut you off. Suffice it’s just said this study is ongoing. I think everyone knows that in CNS, there are large placebo responses in studies, we started 505 as, I know, we don’t like this term, but as a backup study for 501 and 502. It’s ongoing, and it will read out. I frankly, don’t remember how many months it says on clinical trials.gov. But the important part is that it will read out later than 501 and 502. But it is ongoing and it is progressing.

Graig Suvannavejh: Sharon, if I could ask just to follow up, and I’m sure we’ve asked this type of question before, but in terms of risk mitigation strategies on high placebo responses that are typically seen in a lot of psychiatry studies. Can you just remind us what Intra-Cellular is doing to kind of minimize potential placebo responses?

Sharon Mates: Sure, I’ll start and I’ll ask Suresh, if he wants to add anything. So we certainly and, I think most studies have their own risk mitigation. And we all hope that they’re all successful. And usually they are. Sometimes you get blindsided and something else happens, giving you a high placebo response. What we do is, of course, the main thing is to try to ensure that you’re getting in appropriate patients into your study. So we have a very rigorous screening for these patients, when they come in, and a rigorous testing prior to enrollment in the study. Also, you of course, have a large monitoring program throughout the study. I think we also adjudicate patients, so you don’t have just one person making that decision. Patients are adjudicated to make sure that you have appropriate patients coming into the study. I think those are the few things that we do. I don’t know if that about covers it, or Suresh, if you have anything you want to add.

Suresh Durgam: I think that covers broadly what we do and again, there is no, we do use different scales to make sure that there is internal validity between what the patient is saying what the investigator is taking into account. But that’s all part of the adjudication process. Rig

Sharon Mates: It’s a great question. And it’s the bane of all of our existence, right? Is how do you control placebo response, right. Okay, I think we’re out of time here. Operator, so if I could wrap up and I want to thank everybody for joining us today on the call. I think it was a great discussion and some great questions. We look forward to updating you on our progress as we go forward. And we look forward to our next call. Okay, great. Thank you, everyone. Bye-bye.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.