Minerva Neurosciences, Inc. (NASDAQ:NERV) Q4 2022 Earnings Call Transcript

Minerva Neurosciences, Inc. (NASDAQ:NERV) Q4 2022 Earnings Call Transcript March 8, 2023

Operator: Good day, and thank you for standing by. Welcome to Minerva Neurosciences Full Year 2022 Financial Results and Business Update Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Geoff Race, President of Minerva Neurosciences. Please begin.

Geoff Race: Good morning. A press release with the company’s fourth quarter and year-end 2022 financial results and business highlights became available at 7:30 AM Eastern Time today and can be found on the Investors section of our website. Our annual report on Form 10-K was also filed electronically with the 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; and Mr. Fred Ahlholm, Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I’d 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 the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. These forward-looking statements are based on our current expectations and may differ materially from actual results due to a variety of factors that are more fully detailed under the caption risk factors in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission earlier today. Any forward-looking statements made on this call speak only as of today’s date, Wednesday, March 8, 2023, 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’d now like to turn the call over to Remy Luthringer.

Remy Luthringer : Thank you, Geoff, and good morning, everyone. Thank you for joining us today for a review of 2022 and our plans for 2023. During the year, we had multiple interactions with the FDA regarding the regulatory path forward for our lead compound, roluperidone, for the treatment of negative symptoms of patients diagnosed with schizophrenia. In March 2022, we attended a Type C meeting in which the FDA advised on its remaining concerns, which we outlined in our press release in April 2022. Specifically, the FDA was concerned with the applicability of the Phase 2b data conducted in Europe to the U.S. population, and the Phase 3 study has not met the primary end point. In addition, the FDA sought reassurance that Minerva could reliably identify those patients who do not need antipsychotics and how to evaluate the stability of those patients.

The FDA also noted that roluperidone may be used by prescribers in a way that differs significantly from the intended monotherapy use and noted that the sponsor has not presented data to show that roluperidone does not interfere with the safety or efficacy of antipsychotic medications. Following the Type C meeting, Minerva provided additional data, which we believe addressed the concerns raised by the FDA. In August 2022, we submitted an NDA for roluperidone for the treatment of negative symptoms in patients with schizophrenia. The submission was supported by results for late-stage, well-controlled studies in patients with moderate to severe negative symptoms and stable positive symptoms of schizophrenia, studies MIN-101C03 Phase 2b and MIN-101C07 Phase 3.

Both studies had very similar overall study design. Both are multicenter, multinational, randomized, double-blind, placebo-controlled pilot group studies in which patients received as a placebo 32-milligram or 64-milligram doses of roluperidone. In both studies, if patients were taking antipsychotic treatments that were discontinued, and the short washout period was implemented before being randomized to one of the three arms. Both studies captured comparative placebo-controlled data through the 12-week double-blind period. Both studies also provided long-term exposure data regarding the safety and tolerability of roluperidone and efficacy based on blinded doses of roluperidone, specifically intended to demonstrate the maintenance of continuation of improvement in negative symptoms, the stability of positive symptoms and the low rate of relapses of positive symptoms following 24 weeks study MIN-101C03 and 40-week study MIN-101C07 open-label periods.

As mentioned above, with the exception of the duration of the open label period, these two studies were nearly identical with respect to patient population and assessment tools, positive and negative syndrome scale pans, personal and social performance scale, PSP, clinical global impression, CGI. As such, the data from these studies were the basis for the decision to submit the NDA as we believe they provided sufficient evidence to support the long-term safety and efficacy in adults in an area of high unmet medical need and, consequently, merit an in-depth review by the psychiatric division of the FDA. In October 2022, we received a Refuse to File letter, RTF, from the FDA and continued as proposed by the psychotic division, our dialogue at a Type A meeting on November 30.

Following that meeting, the FDA confirmed that the RTF remained in effect. We remain committed to developing roluperidone as a potential transformative treatment for those patients with negative symptoms of schizophrenia. And we anticipate further discussion with the FDA over the coming months regarding the status of the roluperidone NDA and the development program. I look forward to provide more information as it becomes available. I will now turn it over to Fred to discuss our financial performance.

Fred Ahlholm : Thank you, Remy. Earlier this morning, we issued a press release summarizing our operating results for the fourth quarter and year ended December 31, 2022. A more detailed discussion of our results may be found in our annual report on Form 10-K filed with the SEC earlier today. Cash, cash equivalents and restricted cash as of December 31, 2022, were approximately $36.2 million compared to $60.9 million as of December 31, 2021. In January 2023, we received a refund of our NDA filing fee of $3.1 million from the FDA. This refund was made in accordance with the Federal Food Drug and Cosmetic Act, which allows a fee waiver for a small business submitting its first human drug application. We 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 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 expense for the fourth quarter of 2022 and 2021 was $3.2 million and $18.7 million, respectively, a decrease of $15.5 million. The decrease in R&D expense was primarily due to an impairment charge of $15.2 million in the fourth quarter of 2021 to the carrying value of in-process research and development related to our MIN-301 development program. Our R&D expense for the years ended December 31, 2022 and 2021, was $14.6 million and $32 million, respectively, a decrease of $17.4 million. The decrease in R&D expense was primarily due to an impairment charge of $15.2 million in the fourth quarter of 2021 to the carrying value of in-process research and development related to MIN-301 as well as lower clinical trial costs during 2022.

Noncash stock compensation costs included within R&D expense for the years ended December 31, 2022 and 2021, was $2 million and $2.4 million, respectively. General and administrative expense for the fourth quarter of 2022 and 2021 was $1.9 million and $2.6 million, respectively, a decrease of $0.7 million. G&A expense for the years ended December 31, 2022 and 2021, was $10.6 million and $13.3 million, respectively, a decrease of $2.7 million. The decrease in G&A expense for both the fourth quarter and year ended December 31, 2022, versus the prior year period was primarily due to lower compensation expense and lower legal and insurance fees. Noncash stock compensation costs included in G&A expense for the years ended December 31, 2022 and 2021, was $2.1 million and $2.8 million, respectively.

For the fourth quarter of 2022, net loss was $6.7 million or a loss per share of $1.26, basic and diluted, as compared to a net loss of $21.3 million for the fourth quarter of 2021 or a loss per share of $3.99, basic and diluted. For the year ended December 31, 2022, net loss was $32.1 million or a loss per share of $6.01, basic and diluted versus a net loss of $49.9 million for the year ended December 31, 2021 or a loss per share of $9.35, basic and diluted. Now I’d like to turn the call over to the operator for any questions. Operator?

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Q&A Session

Operator: Our first question comes from the line of Andrew Tsai with Jefferies.

Andrew Tsai : Thanks for all the updates. So the first question is, can you possibly remind us the latest and greatest outstanding issues the FDA has following your recent Type A meeting with the NDA? I think last time, you said the FDA did propose a few items in the mine and you’d kind of share it with us. But I’m just curious, what are those things that caused the FDA to issue the RTF and then maintain their stance afterwards?

Remy Luthringer: Yes. Really great question. So clearly, I mean, as we mentioned, yes, we already outlined what were the concerns after the Type C meeting we had with the FDA in April last year. So — but clearly, I mean I think we’ve made a lot of progress, but I think the two main points, and as we mentioned as well, are the fact that they’re still struggling with the applicability of the Phase 2b study, the C03 study results. Otherwise, they suggested or they have really confirmed that this study is a positive study. But I mean we are struggling is the fact that this study has no U.S. patients. So they want free to be sure that U.S. and non-U.S. patients are similar, I mean, in terms of disease, in terms of negative symptoms and mostly in terms of negative symptoms because, as you know, there is no drug approved for negative symptoms, so they want to be extremely sure about this.

So this is the first point. And the second point, they are still having some concerns about the Phase 3 study. And this is due to the fact that we have used a Type 1 correction, which is the Hochberg correction. And as you know, for Hochberg correction, we need to have the tool this hitting a P-value of 0.05. And in our case, it is only the highest dose which has hit a P-value of 0.05. So it’s, in my opinion, really technical. And it is not at all telling you if the drug is working or not. But I mean this is the two main concerns. So if you allow me, and let me comment on the two concerns. So the first one, we continue to have the dialogue with the FDA, and we are providing them with data showing that basically, I mean, the patients we have included in ex U.S. or outside the U.S. compared to the patients we’ve included in the U.S. Keep in mind that for the Phase 3, we had patients from the U.S. are extremely similar in terms of baseline, in terms of the effect of our drug on the negative symptoms and of the overall disease.

We even have provided the information of data from other studies, which have been performed by other sponsors in order to make our case even stronger. So I’m really confident that this is something which we will overcome. Now concerning the Phase 3 study, yes, indeed, I mean only the 64-milligram dose hit the 0.05 P-value. But keep in mind that, I mean, as we already disclosed, our NDA is asking for an approval of 64-milligram only as we are not asking for an approval for 32 milligrams. So clearly, I think if you’re looking really to what we have seen in the Phase 3 with 64-milligram, it is very, very similar to what we have seen in the Phase 2b study. And something which is extremely important is that, I mean, we have only one key secondary endpoint, if you remember, which was a PSP, which is looking to everyday functioning of the patients.

And there, we had a P-value, which was highly significant at 0.016. So clearly, when you are looking to do these patients improve, clearly, they are improving in a significant way with a good P-value in the Phase 2b and in the Phase 3. So clearly, I mean, this is — what are the issues. I don’t know if I answered your question?

Andrew Tsai : Yes, it’s very clear. Thanks. And so now it sounds like you’re going to talk to them over the coming months about the NDA and so forth. And any thoughts on the timing of the resolution or an outcome of this? Is it also going to be another Type A meeting? Or I don’t even know how you classify it, but any clarity around the potential timing of that outcome here?