What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-08 compared with 2021-08-02 · 64 added, 54 removed, 149 unchanged (44% of the section changed)

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The objective of this meeting was to obtain FDA input regarding the roluperidone data package and its readiness to support a New Drug Application (“NDA”).

We summarized FDA’s comments in our 10-K filed on March 8, 2021, and we plan to continue to communicate with FDA regarding their comments and continue to move forward with the clinical pharmacology, non-clinical, and chemistry, manufacturing and controls work needed to support an NDA submission in the first half of 2022.

We summarized FDA’s comments in our 10-K filed on March 8, 2021.

On November 3, 2021 we announced that the FDA denied our request for a pre-NDA meeting for roluperidone and responded that a Type C guidance meeting would be more appropriate to discuss the evidence for use of roluperidone as monotherapy.

Subject to the timing of and feedback from the FDA at a Type C guidance meeting, which we plan to request, we have not changed our projected timeline for submission of an NDA in the first half of 2022.

We have not received regulatory approvals to commercialize any of our product candidates, and we have not generated any revenue from the sales or license of our product candidates.

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PSP total score improved by a mean of 12.3 points in the 32 mg arm and 14.5 points in the 64 mg arm, suggesting functional improvement.

The mean improvement in positive symptoms, as measured by the PANSS positive symptom subscore, was 1.9 points in the 32 mg arm and 1.8 points in the 64 mg arm.

Reduced emotional experience, as measured by a sub-factor of the NSFS that assesses a patient’s motivation to take part in everyday life activities, had a mean improvement of 2.8 points in the 32 mg group and 3.0 points in the 64 mg group.

The mean improvement in positive symptoms, as measured by the Positive and Negative Syndrome Scale (“PANSS”) positive symptom subscore was 1.9 points in the 32 mg arm and 1.8 points in the 64 mg arm.

Reduced emotional experience, as measured by a sub-factor of the Negative Symptoms Factor Score (“ NSFS”) that assesses a patient’s motivation to take part in everyday life activities, had a mean improvement of 2.8 points in the 32 mg group and 3.0 points in the 64 mg group.

The relapse rate during the OLE, defined as patients being withdrawn from the trial due to worsening of symptoms of psychosis, was 15 patients out of 166 patients (9%) in the 32 mg arm and 10 patients out of 167 patients (6%) in the 64 mg arm.

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The subsequent analysis of the change in baseline in NSFS and PSP total score based on the modified ITT population treated with the 64 mg dose resulted in nominally statistically significant p ≤0.044 and p ≤0.017, respectively.

Bioequivalence Study

On April 23, 2021, we initiated subject screening in a pivotal bioequivalence study in healthy volunteers comparing the formulations employed in the Phase 2b and Phase 3 trials as well as at least one new formulation designed in conjunction with our commercial supplier to facilitate large scale manufacturing.

On June 29, 2021, we completed the enrollment of 48 subjects in this study, and top line results are expected in the third quarter of 2021.

Pivotal Bioequivalence Study

On September 30, 2021, we announced results from a pivotal bioequivalence study comparing the roluperidone formulations used in our late-stage Phase 2b, Phase 3 trials, and the planned commercial formulation.

The planned commercial formulation was tested under both fasted and fed condition.

The study met key pharmacokinetic (PK) objectives, and the data demonstrate bioequivalence across the various formulations.

Subject screening in this study was initiated on April 23, 2021, the completion of the enrollment of 48 healthy volunteers was achieved on June 29, 2021, and the last subject assessment took place on July 26, 2021.

Subjects were randomized to the four treatment sequences described above in a 1:1:1:1 ratio.

Of the 48 subjects randomized, 45 completed all study periods.

Male subjects constituted 69% of the participants, and 75% of the subjects were white.

Median age was 36 years, and all had negative SARS-CoV2 status at the beginning of the study and of every study period with the exception of 1 subject who tested positive at the beginning of study Period 4 and was discontinued.

The mean body mass index was 28.1±4 kg/m 2 .

The results demonstrate the comparability of the formulations used in the late-stage efficacy and safety trials of roluperidone with the planned commercial formulation and allow administration of the drug with or without food.

In June 2020 we exercised our right to opt out of our agreement with Janssen for the future Phase 3 development and commercialization of seltorexant.

Under the terms of the opt-out agreement, we are entitled to collect royalties in the mid-single digits on potential future worldwide sales of seltorexant in certain indications, with no further financial obligations to Janssen.

In January 2021 we sold our rights to these potential royalties to Royalty Pharma for a $60 million cash payment and up to an additional $95 million in potential milestones, subject to completion of the Phase 3 program by Jansen and regulatory approvals .

In January 2021 we sold our rights to these potential royalties to Royalty Pharma for a $60 million cash payment and up to an additional $95 million in potential milestone payments, subject to completion of the Phase 3 program by Jansen and regulatory approvals .

As a result of the sale, we will recognize non-cash interest expense related to the amortization of estimated future royalty payments to Royalty Pharma.

Accordingly, for the three and nine months ended September 30, 2021, we recognized $1.7 million and $4.6 million in non-cash interest expense related to this agreement.

The $60 million payment received from Royalty Pharma has been included on our balance sheet under Liability related to the sale of future royalties.

As we recognize interest expense, the Liability related to the sale of future royalties will increase until such time that we begin to receive the related royalty payments.

Under the terms of the agreement, all payments from Royalty Pharma to Minerva, including the initial upfront payment of $60 million as well as amortized interest expense, are not repayable to Royalty Pharma in the event that Janssen discontinues the clinical development of seltorexant or ceases to pursue its commercialization at a future date for any reason.

Financial Overview

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We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success or failure of each product candidate, the estimated costs to continue the development program relative to our available resources, as well as an ongoing assessment as to each product candidate’s commercial potential.

will need to raise additional capital or may seek additional product collaborations in the future in order to complete the development and commercialization of our product candidates.

We will need to raise additional capital or may seek additional product collaborations in the future in order to complete the development and commercialization of our product candidates.

General and Administrative Expenses.

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Results of Operations

Comparison of Three Months Ended June 30, 2021 versus June 30, 2020

Collaborative Revenue

Collaborative Revenue was zero and $41.2 million for the three months ended June 30, 2021 and 2020, respectively, a decrease of $41.2 million.

The decrease in collaborative revenue was the result of opting out of our co-development and license agreement with Janssen and recognizing the revenue during the three months ended June 30, 2020 and no similar activity in the corresponding period in 2021.

Comparison of Three Months Ended September 30, 2021 versus September 30, 2020

Research and Development Expenses

Research and development expenses were $5.5 million and $5.8 million for the three months ended June 30, 2021 and 2020, respectively, a decrease of approximately $0.3 million.

The decrease in research and development 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 three-month core study portion of the trial.

Non-cash stock compensation expense included in research and development expenses was $0.6 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively .

Research and development expenses were $4.5 million and $4.6 million for the three months ended September 30, 2021 and 2020, respectively, a decrease of approximately $0.1 million.

The decrease in research and development expenses was primarily due to a decrease in non-cash stock-based compensation expenses.

Non-cash stock compensation expense included in research and development expenses was $0.5 million and $0.8 million for the three months ended September 30, 2021 and 2020, respectively .

General and Administrative Expenses

General and administrative expenses were $3.4 million and $5.9 million for the three months ended June 30, 2021 and 2020, respectively, a decrease of approximately $2.5 million.

The decrease in general and administrative expenses was primarily due to a decrease in non-cash stock-based compensation expenses and severance benefits.

Non-cash stock compensation expense included in general and administrative expenses was $0.7 million and $2.8 million for the three months ended June 30, 2021 and 2020, respectively .

The decrease in stock compensation expense of $2.1 million was due primarily to certain stock option awards approved in June 2020 as well as additional stock compensation expense incurred under a severance agreement.

General and administrative expenses were $3.0 million and $3.5 million for the three months ended September 30, 2021 and 2020, respectively, a decrease of approximately $0.5 million.

The decrease in general and administrative expenses was primarily due to a decrease in non-cash stock-based compensation expenses and insurance costs.

Non-cash stock compensation expense included in general and administrative expenses was $0.6 million and $1.2 million for the three months ended September 30, 2021 and 2020, respectively .

Foreign Exchange Losses

Foreign exchange losses were $19 thousand and $4 thousand for the three months ended June 30, 2021 and 2020, respectively, an increase of $15 thousand.

The increase in foreign exchange losses was primarily due to a higher level of clinical activities in 2021 denominated in Euros.

Foreign exchange losses were $5 thousand and $27 thousand for the three months ended September 30, 2021 and 2020, respectively, an increase of $22 thousand.

The decrease in foreign exchange losses was primarily due to a lower level of clinical activities in 2021 denominated in Euros.

Investment Income

Investment income was $5 thousand and $25 thousand for the three months ended June 30, 2021 and 2020, respectively, a decrease of $20 thousand.

The decrease was primarily due to lower average balances for cash equivalents and marketable securities during 2021.

Investment income was $4 thousand and $5 thousand for the three months ended September 30, 2021 and 2020, respectively, a decrease of $1 thousand.

The decrease was primarily due to lower interest rates during 2021.

Non-cash interest expense for the sale of future royalties

Non-cash interest expense for the sale of future royalties was $1.6 million for the three months ended June 30, 2021 and zero for the prior year period.

Non-cash interest expense for the sale of future royalties was $1.7 million for the three months ended September 30, 2021 and zero for the prior year period.

The increase was primarily due to the sale of our royalty interest in seltorexant to Royalty Pharma and the effective interest associated with the agreement, see Note 6 for the sale of future royalties.

Comparison of Six Months Ended June 30, 2021 versus June 30, 2020

Comparison of Nine Months Ended September 30, 2021 versus September 30, 2020

Collaborative Revenue

Collaborative Revenue was zero and $41.2 million for the six months ended June 30, 2021 and 2020, respectively, a decrease of $41.2 million.

The decrease in collaborative revenue was the result of opting out of our co-development and license agreement with Janssen and recognizing the revenue during the six months ended June 30, 2020 and no similar activity in the corresponding period in 2021.

Collaborative Revenue was zero and $41.2 million for the nine months ended September 30, 2021 and 2020, respectively, a decrease of $41.2 million.

The decrease in collaborative revenue was the result of opting out of our co-development and license agreement with Janssen and recognizing the revenue during the nine months ended September 30, 2020 and no similar activity in the corresponding period in 2021.

Research and Development Expenses

Research and development expenses were $8.8 million and $13.8 million for the six months ended June 30, 2021 and 2020, respectively, a decrease of approximately $5.0 million.

Non-cash stock compensation expense included in research and development expenses was $1.3 million and $1.4 million for the six months ended June 30, 2021 and 2020, respectively .

Research and development expenses were $13.3 million and $18.5 million for the nine months ended September 30, 2021 and 2020, respectively, a decrease of approximately $5.2 million.

The decrease in research and development expenses was primarily due to a decrease in non-cash stock-based compensation expenses and lower costs for the Phase 3 clinical trial of roluperidone as a result of the completion in May 2020 of the three-month core study portion of the trial.

Non-cash stock compensation expense included in research and development expenses was $1.8 million and $2.2 million for the nine months ended September 30, 2021 and 2020, respectively .

General and Administrative Expenses

General and administrative expenses were $7.7 million and $10.1 million for the six months ended June 30, 2021 and 2020, respectively, a decrease of approximately $2.4 million.

General and administrative expenses were $10.7 million and $13.5 million for the nine months ended September 30, 2021 and 2020, respectively, a decrease of approximately $2.8 million.

The decrease in general and administrative expenses was primarily due to a decrease in non-cash stock-based compensation expenses and severance benefits.

Non-cash stock compensation expense included in general and administrative expenses was $1.6 million and $4.3 million for the six months ended June 30, 2021 and 2020, respectively.

The decrease in stock compensation expense of $2.7 million was due primarily to certain stock option awards approved in June 2020 as well as additional stock compensation expense incurred under a severance agreement.

Non-cash stock compensation expense included in general and administrative expenses was $2.2 million and $5.6 million for the nine months ended September 30, 2021 and 2020, respectively.

The decrease in stock compensation expense of $3.4 million was due primarily to certain stock option awards approved in June 2020 as well as additional stock compensation expense incurred under a severance agreement during 2020.

Foreign Exchange Losses

Foreign exchange losses were $24 thousand and $13 thousand for the six months ended June 30, 2021 and 2020, respectively, an increase of $11 thousand.

The increase in foreign exchange losses was primarily due to a higher level of clinical activities in 2021 denominated in Euros.

Foreign exchange losses were $29 thousand and $41 thousand for the nine months ended September 30, 2021 and 2020, respectively, an increase of $12 thousand.

The decrease in foreign exchange losses was primarily due to a lower level of clinical activities in 2021 denominated in Euros.

Investment Income

Investment income was $9 thousand and $155 thousand for the six months ended June 30, 2021 and 2020, respectively, a decrease of $146 thousand.

Investment income was $13 thousand and $160 thousand for the nine months ended September 30, 2021 and 2020, respectively, a decrease of $147 thousand.

The decrease was primarily due to lower average balances for cash equivalents and marketable securities during 2021.

Non-cash interest expense for the sale of future royalties

Non-cash interest expense for the sale of future royalties was $2.9 million for the six months ended June 30, 2021 and zero for the prior year period.

Non-cash interest expense for the sale of future royalties was $4.6 million for the nine months ended September 30, 2021 and zero for the prior year period.

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Sources of Liquidity

As of June 30, 2021, we had an accumulated deficit of approximately $304.2 million.

As of September 30, 2021, we had an accumulated deficit of approximately $313.4 million.

We anticipate that we will continue to incur net losses for the foreseeable future as we continue the development and potential commercialization of our product candidates and to support our operations as a public company.

At June 30, 2021, we had approximately $74.3 million in cash, cash equivalents, and restricted cash.

In January 2021, Royalty Pharma acquired our royalty interest in seltorexant for an upfront payment of $60 million

and up to $95 million in additional milestone payments.

At September 30, 2021, we had approximately $65.7 million in cash, cash equivalents, and restricted cash.

In January 2021, Royalty Pharma acquired our royalty interest in seltorexant for an upfront payment of $60 million and up to an additional $95 million in potential milestone payments.

The potential future milestone payments to us will be contingent on the achievement of certain clinical, regulatory and commercialization milestones for seltorexant by Janssen.

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As a result, we are entitled to collect royalties in the mid-single digits on potential future sales of seltorexant worldwide in certain indications, with no further financial obligations to Janssen.

On January 19, 2021, we entered into an agreement with Royalty Pharma under which Royalty Pharma has acquired our royalty interest in seltorexant for an upfront payment of $60 million and up to $95 million in future milestone payments, contingent upon the achievement of certain clinical, regulatory and commercial milestones for seltorexant by Janssen.

On January 19, 2021, we entered into an agreement with Royalty Pharma under which Royalty Pharma has acquired our royalty interest in seltorexant for an upfront payment of $60 million and up to an additional $95 million in potential milestone payments, contingent upon the achievement of certain clinical, regulatory and commercial milestones for seltorexant by Janssen.

Uses of Funds

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We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize any of our product candidates.

At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates.

At the same time, we expect our expenses to increase in connection with our ongoing development activities,

particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates.

We also expect to continue to incur costs associated with operating as a public company.

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If we raise additional funds through government or other third party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

There can be no assurance that such additional funding, if available, can be obtained on terms acceptable to us, and the uncertainty and volatility in the capital markets caused by the continuing COVID-19 pandemic may negatively impact the availability

and cost of capital.

If we are unable to obtain additional financing, future operations would need to be scaled back or discontinued.

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The tables below set forth our significant sources and uses of cash for the periods.

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in millions)

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Net Cash Used in Operating Activities

Net cash used in operating activities of approximately $11.1 million during the six months ended June 30, 2021 was primarily due our net loss of $19.4 million, partially offset by stock-based compensation expense of $2.9 million, non-cash interest expense for the sale of future royalties of $2.9 million, a $1.1 million decrease in prepaid expense, a $0.6 million increase in accounts payable, and an increase in accrued expenses of $0.8 million.

Net cash used in operating activities of approximately $16.8 million during the six months ended June 30, 2020 was primarily due to our net income of $17.4 million, stock-based compensation expense of $5.7 million, a $0.9 increase in accounts payable, and a decrease in prepaid expense of $0.6 million, partially offset by a decrease in deferred revenue of $41.2 million, a $0.1 million decrease in accrued expenses, and amortization of investments of $0.1 million.

Net cash used in operating activities of approximately $19.8 million during the nine months ended September 30, 2021 was primarily due to our net loss of $28.6 million, a $0.1 million increase in capitalized software, and approximately a $0.1 million decrease in accrued expenses, partially offset by stock-based compensation expense of $4.0 million, non-cash interest expense for the sale of future royalties of $4.6 million, a $0.2 million decrease in prepaid expense, and a $0.2 million increase in accounts payable.

Net cash used in operating activities of approximately $26.7 million during the nine months ended September 30, 2020 was primarily due to our net income of $9.3 million, stock-based compensation expense of $7.7 million, and a $0.4 million increase in accrued expenses, partially offset by a decrease in deferred revenue of $41.2 million, a $1.7 decrease in accounts payable, and an increase prepaid expense of $1.2 million.

Net Cash Provided by Investing Activities

Net cash provided by investing activities was zero during the three months ended June 30, 2021.

Net cash provided by investing activities of approximately $21.5 million during the six months ended June 30, 2020 was primarily due to the maturity and redemption of marketable securities of $25.4 million, partially offset by the purchase of marketable securities of $3.9 million.

Net cash provided by investing activities was zero during the nine months ended September 30, 2021.

Net cash provided by investing activities of approximately $24.5 million during the nine months ended September 30, 2020 was primarily due to the maturity and redemption of marketable securities of $28.4 million, partially offset by the purchase of marketable securities of $3.9 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities of $60 million during the six months ended June 30, 2021 was due to the proceeds from the sale of future royalties of $60 million.

Net cash provided by financing activities of $6.1 million during the six months ended June 30, 2020 was due to the gross proceeds from the June 2020 at the market stock offering of $5.2 million less costs of $0.2 million, and proceeds from the exercise of common stock options of $1.1 million.

Net cash provided by financing activities of $60 million during the nine months ended September 30, 2021 was due to the proceeds from the sale of future royalties of $60 million.

Net cash provided by financing activities of $13.3 million during the nine months ended September 30, 2020 was due to gross proceeds received from the ‘at the market’ stock offering of $12.6 million less costs of $0.4 million, and proceeds from the exercise of common stock options of $1.1 million.

Off-Balance Sheet Arrangements

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and income taxes.

We reviewed our policies and determined that those policies and the accounting policies and

estimates relating to the liability related to the sale of future royalties were our most critical accounting policies for the six months ended June 30, 2021 .

We reviewed our policies and determined that those policies and the accounting policies and estimates relating to the liability related to the sale of future royalties were our most critical accounting policies for the nine months ended September 30, 2021.

Liability related to the sale of future royalties

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As a result, the Company recorded the upfront payment of $60 million from this transaction as a liability related to the sale of future royalties to be amortized to interest expense using the effective interest rate method over the life of the arrangement.

The liability related to sale of future royalties and the related interest expense are based on our current estimates of future royalties expected to be paid over the life of the arrangement.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis