Minerva Neurosciences, Inc. 10-Q

Item 1 – Financial Statements MINERVA NEUROSCIENCES, INC. Condensed Consolidated Balance Sheets (Unaudited) September 30, December 31, 2021 2020 Assets Current assets Cash and cash equivalents $ 65,588,119 $ 25,356,952 Restricted cash 100,000 100,000 Prepaid expenses and other current assets 1,750,451 1,983,264 Total current assets 67,438,570 27,440,216 Capitalized software, net 51,080 — Other noncurrent assets — 14,808 Operating lease right-of-use assets — 101,786 In-process research and development 15,200,000 15,200,000 Goodwill 14,869,399 14,869,399 Total assets $ 97,559,049 $ 57,626,209 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 1,200,509 $ 995,614 Accrued expenses and other current liabilities 1,882,251 2,053,409 Operating leases — 111,229 Total current liabilities 3,082,760 3,160,252 Deferred taxes 1,803,356 1,803,356 Liability related to the sale of future royalties 64,594,985 — Total liabilities 69,481,101 4,963,608 Commitments and contingencies (Note 9) Stockholders’ equity Preferred stock; $ 0.0001 par value; 100,000,000 shares authorized; none issued or outstanding as of September 30, 2021 and December 31, 2020, respectively — — Common stock; $ 0.0001 par value; 125,000,000 shares authorized; 42,721,566 shares issued and outstanding as of September 30, 2021 and December 31, 2020 4,272 4,272 Additional paid-in capital 341,468,426 337,453,776 Accumulated deficit ( 313,394,750 ) ( 284,795,447 ) Total stockholders’ equity 28,077,948 52,662,601 Total liabilities and stockholders’ equity $ 97,559,049 $ 57,626,209 See accompanying notes to condensed consolidated financial statements. 4 MINERVA NEUROSCIENCES, INC. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues Collaborative revenue $ — $ — $ — $ 41,175,600 Total revenues — — — 41,175,600 Expenses Research and development $ 4,512,853 $ 4,638,614 $ 13,292,488 $ 18,488,108 General and administrative 3,004,765 3,451,667 10,695,944 13,541,253 Total expenses 7,517,618 8,090,281 23,988,432 32,029,361 (Loss) gain from operations ( 7,517,618 ) ( 8,090,281 ) ( 23,988,432 ) 9,146,239 Foreign exchange losses ( 4,855 ) ( 27,496 ) ( 28,708 ) ( 40,549 ) Investment income 4,156 5,164 12,822 159,908 Non-cash interest expense for the sale of future royalties ( 1,687,090 ) — ( 4,594,985 ) — Net (loss) income $ ( 9,205,407 ) $ ( 8,112,613 ) $ ( 28,599,303 ) $ 9,265,598 Net (loss) income per share, basic $ ( 0.22 ) $ ( 0.19 ) $ ( 0.67 ) $ 0.23 Weighted average shares outstanding, basic 42,721,566 41,917,923 42,721,566 40,199,196 Net (loss) income per share, diluted $ ( 0.22 ) $ ( 0.19 ) $ ( 0.67 ) $ 0.23 Weighted average shares outstanding, diluted 42,721,566 41,917,923 42,721,566 40,477,801 See accompanying notes to condensed consolidated financial statements. 5 MINERVA NEUROSCIENCES, INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) Common Stock Additional Accumulated Shares Amount Paid-In Capital Deficit Total Balances at January 1, 2020 39,084,121 $ 3,908 $ 314,511,853 $ ( 286,736,218 ) $ 27,779,543 Exercise of stock options 135,013 14 797,615 — 797,629 Stock-based compensation — — 2,198,187 — 2,198,187 Net loss — — — ( 12,151,165 ) ( 12,151,165 ) Balances at March 31, 2020 39,219,134 $ 3,922 $ 317,507,655 $ ( 298,887,383 ) $ 18,624,194 Issuance of common stock in a public offering 1,361,956 136 5,178,324 — 5,178,460 Costs related to issuance of common stock — — ( 219,517 ) — ( 219,517 ) Exercise of stock options 63,749 7 346,019 — 346,026 Stock-based compensation — — 3,485,482 — 3,485,482 Net income — — — 29,529,376 29,529,376 Balances at June 30, 2020 $ 40,644,839 $ 4,065 $ 326,297,963 $ ( 269,358,007 ) $ 56,944,021 Issuance of common stock in a public offering 2,019,652 201 7,371,408 — 7,371,609 Costs related to issuance of common stock — — ( 236,149 ) — ( 236,149 ) Vesting of restricted stock units 10,000 1 ( 1 ) — — Stock-based compensation — — 2,056,035 — 2,056,035 Net loss — — — ( 8,112,613 ) ( 8,112,613 ) Balances at September 30, 2020 $ 42,674,491 $ 4,267 $ 335,489,256 $ ( 277,470,620 ) $ 58,022,903 Balances at January 1, 2021 42,721,566 $ 4,272 $ 337,453,776 $ ( 284,795,447 ) $ 52,662,601 Stock-based compensation — — 1,516,064 — 1,516,064 Net loss — — — ( 8,804,733 ) ( 8,804,733 ) Balances at March 31, 2021 42,721,566 $ 4,272 $ 338,969,840 $ ( 293,600,180 ) $ 45,373,932 Stock-based compensation — — 1,384,060 — 1,384,060 Net loss — — — ( 10,589,163 ) ( 10,589,163 ) Balances at June 30, 2021 $ 42,721,566 $ 4,272 $ 340,353,900 $ ( 304,189,343 ) $ 36,168,829 Stock-based compensation — — 1,114,526 — 1,114,526 Net loss — — — ( 9,205,407 ) ( 9,205,407 ) Balances at September 30, 2021 $ 42,721,566 $ 4,272 $ 341,468,426 $ ( 313,394,750 ) $ 28,077,948 See accompanying notes to condensed consolidated financial statements. 6 MINERVA NEUROSCIENCES, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities: Net (loss) income $ ( 28,599,303 ) $ 9,265,598 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization — 13,100 Accretion of marketable securities premium — ( 86,774 ) Amortization of right-of-use assets 101,786 118,487 Stock-based compensation expense 4,014,650 7,739,704 Non-cash interest expense associated with the sale of future royalties 4,594,985 — Changes in operating assets and liabilities Prepaid expenses and other current assets 232,813 ( 1,191,811 ) Capitalized software ( 51,080 ) — Other noncurrent assets 14,808 — Accounts payable 204,895 ( 1,615,419 ) Accrued expenses and other current liabilities ( 171,158 ) 396,747 Operating lease liabilities, current ( 111,229 ) ( 15,945 ) Deferred revenue — ( 41,175,600 ) Operating lease liabilities, noncurrent — ( 111,229 ) Net cash used in operating activities ( 19,768,833 ) ( 26,663,142 ) Cash flows from investing activities: Proceeds from the maturity and redemption of marketable securities — 28,400,000 Purchase of marketable securities — ( 3,871,706 ) Net cash provided by investing activities — 24,528,294 Cash flows from financing activities: Proceeds from the sale of future royalties 60,000,000 — Proceeds from sales of common stock in public offering — 12,550,069 Fees paid in connection with public offering — ( 455,666 ) Proceeds from exercise of stock options — 1,143,655 Net cash provided by financing activities 60,000,000 13,238,058 Net increase in cash, cash equivalents and restricted cash 40,231,167 11,103,210 Cash, cash equivalents and restricted cash Beginning of period 25,456,952 21,512,623 End of period $ 65,688,119 $ 32,615,833 Reconciliation of the Condensed Consolidated Statements of Cash Flows to the Condensed Consolidated Balance Sheets Cash and cash equivalents $ 65,588,119 $ 32,515,833 Restricted cash 100,000 100,000 Total cash, cash equivalents and restricted cash $ 65,688,119 $ 32,615,833 See accompanying notes to condensed consolidated financial statements. 7 MINERVA NEUROSCIENCES, INC. Notes to Condensed Consolidated Financial Statements As of September 30, 2021 and for the Nine Months Ended September 30, 2021 and 2020 (Unaudited) NOTE 1 — NATURE OF OPERATIONS AND LIQUIDITY Nature of Operations Minerva Neurosciences, Inc. (“Minerva” or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of product candidates to treat patients suffering from central nervous system (“CNS”) diseases. The Company’s lead product candidate is roluperidone (f/k/a MIN-101), a compound the Company is developing for the treatment of negative symptoms in patients with schizophrenia, and MIN-301, a compound the Company is developing for the treatment of Parkinson’s disease. In addition, Minerva previously co-developed seltorexant (f/k/a MIN-202 or JNJ-42847922) with Janssen Pharmaceutica NV (“Janssen”) for the treatment of insomnia disorder and adjunctive treatment of Major Depressive Disorder (“MDD”). During 2020 Minerva exercised its right to opt out of the joint development agreement with Janssen for the future development of seltorexant. As a result, the Company will be 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, the Company sold its rights to these potential royalties to Royalty Pharma (see Notes 5 and 6). The Company holds the license to roluperidone from Mitsubishi Tanabe Pharma Corporation (“MTPC”) with the rights to develop, sell and import roluperidone globally, excluding most of Asia. The Company also has exclusive rights to develop and commercialize MIN-301. Liquidity The accompanying interim condensed consolidated financial statements have been prepared as though the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has limited capital resources and has incurred recurring operating losses and negative cash flows from operations since inception. As of September 30, 2021, the Company has an accumulated deficit of approximately $ 313.4 million and net cash used in operating activities was approximately $ 19.8 million during the nine months ended September 30, 2021. Management expects to continue to incur operating losses and negative cash flows from operations in the future. The Company has financed its operations to date from proceeds from the sale of common stock, warrants, loans, convertible promissory notes, collaboration agreements and royalty sales. As of September 30, 2021, the Company had cash, cash equivalents, and restricted cash of $ 65.7 million. The Company believes that its existing cash, cash equivalents, and restricted cash will be sufficient to meet its cash commitments for at least the next 12 months after the date that the interim condensed consolidated financial statements are issued. The process of drug development can be costly and the timing and outcomes of clinical trials is uncertain. The assumptions upon which the Company has based its estimates are routinely evaluated and may be subject to change. The actual amount of the Company’s expenditures will vary depending upon a number of factors including but not limited to the design, timing and duration of future clinical trials, the progress of the Company’s research and development programs, the infrastructure to support a commercial enterprise, the cost of a commercial product launch, and the level of financial resources available. The Company has the ability to adjust its operating plan spending levels based on the timing of future clinical trials, which will be predicated upon adequate funding to complete the trials. The Company will need to raise additional capital in order to continue to fund operations and fully fund later stage clinical development programs. Specifically, management continues to evaluate the MIN-301 program in regards to current liquidity, timing of future development, and potential revenue. The Company believes that it will be able to obtain additional working capital through equity financings or other arrangements to fund future operations; however, there can be no assurance that such additional financing, if available, can be obtained on terms acceptable to the Company. If the Company is unable to obtain such additional financing, future operations would need to be scaled back or discontinued. Significant Risks and Uncertainties Litigation On December 8, 2020 and January 11, 2021, purported stockholders of the Company filed two putative securities class action complaints in the United States District Court for the District of Massachusetts, entitled McCoy v. Minerva Neurosciences, Inc., et al., No. 1:20-cv-12176 and Ao v. Minerva Neurosciences, Inc. et al., No. 1:21-cv-10051 , respectively, against the Company and the Company’s Chairman and Chief Executive Officer (collectively, the “Defendants"). The complaints are nearly identical and allege that 8 the Defendants made material false and/or misleading statements regarding the development of the Company’s drug candidate roluperidone purportedly causing losses to investors who acquired the Company’s common stock between May 15, 2017 and November 30, 2020. The complaints do not quantify any alleged damages but, in addition to attorneys' fees and costs, plaintiffs seek to recover damages on behalf of themselves and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result. On March 5, 2021, the Court entered an order consolidating the actions into a case captioned In re Minerva Neurosciences, Inc. Securities Litigation, No. 1:20-cv-12176 and appointing lead plaintiffs and their counsel. On March 19, 2021, the parties filed a stipulated proposed order with the Court staying the Defendants’ response to the complaint until after plaintiffs file an amended complaint. On May 5, 2021, the parties filed a stipulation and proposed order voluntarily dismissing the lawsuit on behalf of the appointed lead plaintiffs. Also on May 5, 2021, a second plaintiff filed a motion for appointment as lead plaintiff, which the Court granted on May 21, 2021. On June 9, 2021, before the lead plaintiff’s deadline to amend the complaint and before defendants filed any response to the complaint, the parties stipulated to voluntary dismissal of the lawsuit on behalf of the appointed lead plaintiff. The Court entered the parties’ stipulation of dismissal on July 9, 2021 and closed the case. COVID-19 Pandemic The Company’s business could be adversely affected by the effects of the ongoing COVID-19 pandemic, which continues to have a negative impact on the local, regional, national and global scale. In response to the pandemic, a number of jurisdictions in which the Company or its service providers operate implemented shelter-in-place or similar type restrictions, which limited on-site activity to certain service providers. To support the health and well-being of its employees, partners and communities, the Company implemented work-from-home policies for its employees, which continue to be in effect. While global vaccination efforts are underway and certain jurisdictions, including Massachusetts, have reopened businesses and governmental agencies, there remain limitations on the physical operations of businesses and prohibitions on certain non-essential gatherings, and we are unable to accurately predict the full impact that COVID-19 will have due to numerous uncertainties, including the duration of the outbreak, the result of vaccination efforts, resurgence of the virus, actions that may be taken by governmental authorities, the impact on our business including our clinical programs and timelines, and the impact to the business of our service providers and partners. While the COVID-19 pandemic has not had a material adverse impact on the Company’s operations to date, this disruption, if sustained or recurrent, could have a material adverse effect on the Company’s operating results, its ability to raise capital needed to develop and commercialize products and the Company’s overall financial condition. In addition, a recession or market correction resulting from the spread of the coronavirus could materially affect the value of the Company’s common stock. The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Quarterly Report on Form 10-Q. Refer to Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q for a complete description of the material risks that the Company currently faces. NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim reporting and the requirements of the Securities and Exchange Commission (“SEC”) in accordance with Regulation S-X, Rule 8-03. Under those rules, certain notes and financial information that are normally required for annual financial statements can be condensed or omitted. In the opinion of the Company’s management, the accompanying financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the financial position as of September 30, 2021, the results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year. The consolidated balance sheet as of December 31, 2020 was derived from the audited annual financial statements. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2021. Consolidation The accompanying consolidated financial statements include the results of the Company and its wholly-owned subsidiaries, Mind-NRG Sarl and Minerva Neurosciences Securities Corporation. Intercompany transactions have been eliminated. 9 Significant risks and uncertainties The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s products, the Company’s ability to obtain regulatory approval to market its products, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products, the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company’s ability to raise capital. The Company currently has no commercially approved products and there can be no assurance that the Company’s research and development will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants and obtaining and protecting intellectual property. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents Cash equivalents include short-term, highly-liquid instruments, consisting of money market accounts and short-term investments with maturities from the date of purchase of 90 days or less. The majority of cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand which reduces counterparty performance risk. Restricted cash Cash accounts with any type of restriction are classified as restricted. The Company maintained restricted cash balances as collateral for corporate credit cards in the amount of $ 0.1 million at each of September 30, 2021 and December 31, 2020. Marketable securities Marketable securities consisted of corporate and U.S. government debt securities. Based on the Company’s intentions regarding its marketable securities, all marketable securities were classified as held-to-maturity and were carried under the amortized cost approach. The Company’s investments in marketable securities were classified as Level 2 within the fair value hierarchy. As of September 30, 2021, all marketable securities have matured. Research and development costs Costs incurred in connection with research and development activities are expensed as incurred. These costs include licensing fees to use certain technology in the Company’s research and development projects as well as fees paid to consultants and various entities that perform certain research and testing on behalf of the Company and costs related to salaries, benefits, bonuses and stock-based compensation granted to employees in research and development functions. The Company determines expenses related to clinical studies based on estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and contract research organizations (“CROs”) that conduct and manage clinical studies on its behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the accrual is adjusted accordingly. The expenses for some trials may be recognized on a straight-line basis if the anticipated costs are expected to be incurred ratably during the period. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued expenses. In-process research and development In-process research and development (“IPR&D”) assets represent capitalized incomplete research projects that the Company acquired through business combinations. Such assets are initially measured at their acquisition date fair values. The initial fair values of the 10 research projects are recorded as intangible assets on the balance sheet, rather than expensed, regardless of whether these assets have an alternative future use. The amounts capitalized are being accounted for as indefinite-lived intangible assets, subject to impairment testing, until completion or abandonment of research and development efforts associated with the project. An IPR&D asset is considered abandoned when it ceases to be used (that is, research and development efforts associated with the asset have ceased, and there are no plans to sell or license the asset or derive defensive value from the asset). At that point, the asset is considered to be disposed of and is written off. Upon successful completion of each project, the Company will make a determination about the then remaining useful life of the intangible asset and begin amortization. The Company tests its indefinite-lived intangibles, IPR&D assets, for impairment annually on November 30 and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. When testing indefinite-lived intangibles for impairment, the Company may assess qualitative factors for its indefinite-lived intangibles to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the asset is impaired. Alternatively, the Company may bypass this qualitative assessment for some or all of its indefinite-lived intangibles and perform the quantitative impairment test that compares the fair value of the indefinite-lived intangible asset with the asset’s carrying amount. There was no impairment of IPR&D for the three and nine months ended September 30, 2021 or 2020. Stock-based compensation The Company recognizes compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, including grants of employee stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. The Company determines the fair value of stock-based awards using the Black-Scholes option-pricing model which uses both historical and current market data to estimate fair value. The method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options. Forfeitures are recorded as they occur instead of estimating forfeitures that are expected to occur. The fair value of restricted stock units (“RSUs”) is equal to the closing price of the Company’s common stock on the date of grant. See Note 8 for information on the Company’s performance-based restricted stock units (“PRSU”) grants. The date of expense recognition for grants to non-employees is the earlier of the date at which a commitment for performance by the counterparty to earn the equity instrument is reached or the date at which the counterparty’s performance is complete. The Company determines the fair value of stock-based awards granted to non-employees similar to the way fair value of awards are determined for employees except that certain assumptions used in the Black-Scholes option-pricing model, such as expected life of the option, may be different. Foreign currency transactions The Company’s functional currency is the U.S. Dollar. The Company pays certain vendor invoices in the respective foreign currency. The Company records an expense in U.S. Dollars at the time the liability is incurred. Changes in the applicable foreign currency rate between the date an expense is recorded and the payment date is recorded as a foreign currency gain or loss. (Loss) Income per share Basic (loss) income per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity. The treasury stock method is used to determine the dilutive effect of the Company’s stock options and warrants. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents and marketable securities. The Company maintains its cash and cash equivalent balances in the form of business checking accounts and money market accounts, the balances of which, at times, may exceed federally insured limits. Exposure to cash and cash equivalents credit risk is reduced by placing such deposits with major financial institutions and monitoring their credit ratings. Marketable securities consist primarily of corporate bonds, with fixed interest rates. Exposure to credit risk of marketable securities is reduced by maintaining a diverse portfolio and monitoring their credit ratings. 11 Equipment Equipment is stated at cost less accumulated depreciation. Equipment is depreciated on the straight-line basis over their estimated useful lives of three years . Expenditures for maintenance and repairs are charged to expense as incurred. Software The Company accounts for capitalized software in accordance with the Financial Accounting Standards Board (“ FASB”) Accounting Standards Codification (“ ASC”) Topic 350, Intangibles—Goodwill and Other (“ASC 350-40”), which provides guidance for computer software developed or obtained for internal use. The Company is required to continually evaluate the stage of the implementation process to determine whether costs are expensed or capitalized. Costs incurred during the preliminary project phase or planning and research phase are expensed as incurred. Costs incurred during the development phase, such as material and direct services costs, compensation costs of employees associated with the development and interest cost, are capitalized as incurred. Costs incurred during the post-implementation or operation phase, such as training and maintenance costs, are expensed as incurred. In addition, costs incurred to modify existing software that result in additional functionality are capitalized as incurred. Capitalized costs are amortized over the expected useful life of the asset. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Also, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. The Company has elected not to recognize on the balance sheet leases with terms of 12 months or less. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. The Company monitors its plans to renew its material leases on a quarterly basis. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in the Company’s leases is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term and in a similar economic environment. In transition to FASB ASC Topic 842, Leases (“ASC 842”), the Company utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates. In accordance with ASC 842, components of a lease should be allocated between lease components (e.g., land, building, etc.) and non-lease components (e.g., common area maintenance, consumables, etc.). The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components by class of underlying asset where entities would account for each lease component and the related non-lease component together as a single component. For new and amended leases beginning in 2019 and after, the Company has elected to account for the lease and non-lease components for leases for classes of all underlying assets and allocate all of the contract consideration to the lease component only. Long-lived assets The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. If required, the Company compares the estimated undiscounted future net cash flows to the related asset’s carrying value to determine whether there has been an impairment. If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised 12 values in the period the impairment becomes known. The Company believes that all long-lived assets are recoverable, and no impairment was deemed necessary at September 30, 2021 and 2020. Goodwill The Company tests its goodwill for impairment annually, or whenever events or changes in circumstances indicate an impairment may have occurred, by comparing its reporting unit’s carrying value to its fair value. Impairment may result from, among other things, deterioration in the performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. If the Company determines that an impairment has occurred, it is required to record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. In evaluating the recoverability of the carrying value of goodwill, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the acquired assets. Changes in strategy or market conditions could significantly impact those judgments in the future and require an adjustment to the recorded balances. The Company tested its goodwill for impairment as of November 30, 2020. There was no impairment of goodwill for the nine months ended September 30, 2021 and 2020. Revenue recognition The Company applies the revenue recognition guidance in accordance with ASC 606, Revenue from Contracts with Customers . Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and title has passed, the price is fixed or determinable, and collectability is reasonably assured. The Company is a development stage company and has had no revenues from product sales to date. When the Company enters into an arrangement that meets the definition of a collaboration under ASC 808, Collaborative Arrangements , the Company recognizes revenue as research and development is performed and its respective share of the expenses are incurred. The Company assesses whether the arrangement contains multiple elements or deliverables, which may include (1) licenses to the Company's technology, (2) research and development activities performed for the collaboration partner, and (3) participation on Joint Steering Committees. Payments may include non-refundable, upfront payments, milestone payments upon achieving significant development events, and royalties on future sales. Each required deliverable is evaluated to determine whether it qualifies as a separate unit of accounting based on whether the deliverable has “stand-alone value” to the customer. The arrangement’s consideration is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence of selling price, and (iii) best estimate of selling price. The best estimate of selling price reflects the Company’s best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis. The consideration allocated to each unit of accounting is then recognized as the related goods or services are delivered, limited to the consideration that is not contingent upon future deliverables. Supply or service transactions may involve the charge of a nonrefundable initial fee with subsequent periodic payments for future products or services. The up-front fees, even if nonrefundable, are recognized as revenue as the products and/or services are delivered and performed over the term of the arrangement. During the year ended December 31, 2020, the Company recognized $ 41.2 million in collaborative revenue as a result of opting out of its agreement with Janssen (see Note 5). Deferred revenue The Company applies the revenue recognition guidance in accordance with ASC 606. Using ASC 606, revenue that is unearned is deferred. Deferred revenue that is expected to be recognized as revenue more than one year subsequent to the balance sheet date is classified as long-term deferred revenue. Liability related to the sale of future royalties The Company treats the sale of future royalties to Royalty Pharma as a debt financing, as the Company has significant continuing involvement in facilitating the transfer of royalties to Royalty Pharma and Royalty Pharma has recourse against the Company relating to the payments due from Janssen. 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. 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. The liability related to sale of future royalties and the related interest expense is based on our current estimates of future royalties expected to be paid over the life of the arrangement. The Company will periodically assess the expected royalty payments using a combination of internal projections and forecasts from external sources. To the extent the Company’s future estimates of royalty 13 payments are greater or less than previous estimates or the estimated timing of such payments is materially different than its previous estimates, the Company will prospectively recognize related non-cash interest expense. For further discussion of the sale of future royalties, please refer to Note 6, Sale of Future Royalties. Segment information Operating segments are defined as components of an enterprise (business activity from which it earns revenue and incurs expenses) about which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief decision maker, who is the Chief Executive Officer, reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company views its operations and manages its business as one operating segment. Comprehensive loss The Company had no items of comprehensive loss other than its net loss for each period presented. Recent accounting pronouncements From time to time, new accounting pronouncements are issued by the FASB and are adopted by the Company as of the specified effective date. NOTE 3 — ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: September 30, 2021 December 31, 2020 Research and development costs and other accrued expenses $ 976,635 $ 1,880,552 Accrued bonus 601,264 — Professional fees 227,874 140,981 Vacation pay 76,478 — Accrued severance — 31,876 $ 1,882,251 $ 2,053,409 NOTE 4 — NET (LOSS) INCOME PER SHARE OF COMMON STOCK Basic (loss) income per share is calculated by dividing the net (loss) income by the weighted average number of shares of common stock outstanding. Diluted (loss) income per share is computed by dividing the net (loss) income by the weighted average number of shares of common stock outstanding, plus potential outstanding common stock for the period. Potential outstanding common stock includes stock options and shares underlying RSUs, but only to the extent that their inclusion is dilutive. The following table sets forth the computation of basic and diluted (loss) income per share for common stockholders: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net (loss) income $ ( 9,205,407 ) $ ( 8,112,613 ) $ ( 28,599,303 ) $ 9,265,598 Weighted average shares of common stock outstanding - basic 42,721,566 41,917,923 42,721,566 40,199,196 Dilutive effect — — — 278,605 Weighted average shares of common stock outstanding - diluted 42,721,566 41,917,923 42,721,566 40,477,801 Net (loss) income per ordinary share: Basic $ ( 0.22 ) $ ( 0.19 ) $ ( 0.67 ) $ 0.23 Diluted $ ( 0.22 ) $ ( 0.19 ) $ ( 0.67 ) $ 0.23 14 The following securities outstanding at September 30, 2021 and 2020 have been excluded from the calculation of weighted average shares outstanding as their effect on the calculation of (loss) income per share is antidilutive: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Common stock options 1,794,467 9,347,054 1,794,467 6,357,500 Restricted stock units — 48,650 — 48,650 Performance-based restricted stock units 3,651,403 — 3,651,403 — Common stock warrants 40,790 40,790 40,790 40,790 NOTE 5 — CO-DEVELOPMENT AND LICENSE AGREEMENT On February 13, 2014, the Company signed a co-development and license agreement (the “Agreement”) with Janssen, which became effective upon completion of the Company’s initial public offering and provided for the payment of a $ 22.0 million license fee by the Company. Under the Agreement, Janssen granted the Company an exclusive license to certain patent and patent applications to sell products containing any orexin 2 compound, controlled by Janssen and to seltorexant for any use in humans. The Company accounted for the Agreement as a joint risk-sharing collaboration in accordance with ASC 808, Collaborative Arrangements . During 2017, the Company entered into an amendment (the “Amendment”) to the Agreement whereby Janssen waived its right to royalties on seltorexant insomnia sales in the Minerva Territory, made an upfront payment to the Company of $ 30 million and agreed to waive development payments from the Company until completion of the Phase 2b development milestone, referred to as “Decision Point 4”. Subsequent to the results reported from three Phase 2b trials of seltorexant, in June 2020 the Company exercised its right to opt out of the Agreement with Janssen under a Settlement Agreement pursuant to which the Company and Janssen resolved certain disputes under the Agreement. As a result of the exercise of its right to opt out of the Agreement with Janssen, the Company will be entitled to collect a royalty on potential worldwide sales of seltorexant in certain indications in the mid-single digits, with no further financial obligations to Janssen. As a result of opting out of the Agreement with Janssen, the Company recognized $ 41.2 million in collaborative revenue during the second quarter of 2020 which had previously been included on the balance sheet under deferred revenue. The $41.2 million in collaborative revenue represents the $ 30 million payment made by Janssen and $ 11.2 million in previously accrued collaborative expenses forgiven by Janssen upon the effective date of the Amendment. T he Company does not have any future performance obligations under the agreement and would recognize any future royalty revenues in the periods of the sale of the related products. In January 2021, the Company sold its rights to these potential royalties to Royalty Pharma. Please refer to Note 6 further discussion of the sale of future royalties. NOTE 6 — SALE OF FUTURE ROYALTIES On January 19, 2021, the Company entered into an agreement with Royalty Pharma under which Royalty Pharma acquired Minerva’s royalty interest in seltorexant for an upfront payment of $ 60 million and up to an additional $ 95 million in potential milestone payments. These milestone payments are contingent upon the achievement of certain clinical, regulatory and commercial milestones for seltorexant by Janssen or any other party in the event that Janssen sells seltorexant. Under the terms of the agreement, the Company has significant continuing involvement in facilitating the transfer of royalties to Royalty Pharma and Royalty Pharma has recourse against the Company relating to the payments due from Janssen. As such, the Company applied the debt recognition guidance under ASC 470, Debt , and recorded the upfront payment of $ 60 million as a liability related to the sale of future royalties (“Royalty Obligation”), which will be amortized under the interest method over the estimated life of the agreement. 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. In addition, in accordance with ASC 470, Debt , the Company will account for any royalties received in the future as non-cash royalty revenue. As royalties are remitted to the Company from Janssen and subsequently passed onto Royalty Pharma, the balance of the Royalty Obligation will be effectively repaid over the life of the co-development and license agreement (the “Agreement”) with Janssen. In order to determine the amortization of the Royalty Obligation, the Company is required to estimate the total amount of future royalty payments to Royalty Pharma over the life of the Agreement. In addition to the $60 million upfront payment, up to an additional $95 15 million in potential milestone payments will also be recorded as a liability related to the sale of future royalties when they are received and amortized under the interest method over the estimated remaining life of the agreement. At execution, the Company’s estimate of this total interest expense resulted in an effective annual interest rate of approximately 10.5 %. As of September 30, 2021, the Company estimated the effective annual interest rate to be approximately 10.7 %. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period. The Company will periodically assess the estimated royalty payments to Royalty Payments from Janssen and to the extent the amount or timing of such payments is materially different than the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. There are a number of factors that could materially affect the amount and timing of royalty payments to Royalty Pharma from Janssen, and correspondingly, the amount of interest expense recorded by the Company, most of which are not within the Company’s control. Such factors include, but are not limited to, delays or discontinuation of development of seltorexant , regulatory approval, changing standards of care, the introduction of competing products, manufacturing or other delays, generic competition, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties remitted to Royalty Pharma are made in U.S. dollars (“USD”) while the underlying sales of seltorexant will be made in currencies other than USD, the ongoing COVID-19 pandemic, and other events or circumstances that are not currently foreseen. Changes to any of these factors could result in increases or decreases to both royalty revenues and interest expense. The following table shows the activity of the Royalty Obligation since the transaction inception through September 30, 2021: September 30, 2021 Upfront payment from the sale of future royalties $ 60,000,000 Non-cash interest expense associated with the sale of future royalties 4,594,985 Liability related to the sale of future royalties $ 64,594,985 NOTE 7 — STOCKHOLDERS’ EQUITY At-the-Market Equity Offering Program On August 10, 2018 , the Company entered into the Sales Agreement with Jefferies pursuant to which the Company may offer and sell, from time to time, through Jefferies, up to $ 50.0 million in shares of the Company's common stock, by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. During the year ended December 31, 2020, the Company issued and sold 3,381,608 shares of the Company's common stock under the Sales Agreement. The shares were sold at an average price of $ 3.7113 per share for aggregate net proceeds to the Company of approximately $ 12.1 million, after deducting sales commissions and offering costs payable by the Company. Term Loan Warrants In connection with the Company’s former Loan and Security Agreement with Oxford Finance LLC and Silicon Valley Bank (the “Lenders”), which provided for term loans to the Company in an aggregate principal amount of up to $ 15 million in two tranches on January 15, 2016, the Company issued the Lenders warrants to purchase 40,790 shares of common stock at a per share exercise price of $ 5.516 . The warrants are immediately exercisable upon issuance, and other than in connection with certain mergers or acquisitions, will expire on the ten-year anniversary of the date of issuance. The fair value of the warrants was estimated at $ 0.2 million using a Black-Scholes model and assuming: (i) expected volatility of 100.8 %, (ii) risk free interest rate of 1.83 %, (iii) an expected life of 10 years and (iv) no dividend payments. The fair value of the warrants was included as a discount to the term loans drawn at such time and also as a component of additional paid-in capital and were amortized to interest expense over the term of the loan. Although the term loans were repaid in August 2018, all related warrants were outstanding and exercisable as of September 30, 2021. NOTE 8 — STOCK AWARD PLAN AND STOCK-BASED COMPENSATION In December 2013, the Company adopted the 2013 Equity Incentive Plan (as subsequently amended and restated, the “Plan”), which provides for the issuance of options, stock appreciation rights, stock awards and stock units. Pursuant to Nasdaq listing rules, the Company issued inducement awards in December 2017 to the Company’s President outside of the Plan in the form of an option to purchase 775,000 shares of the Company’s common stock and a RSU award to purchase 40,000 shares of the Company’s common stock. As of September 30, 2020, all remaining inducement awards have been canceled or expired. In June 2020, the Company increased the aggregate number of shares of common stock authorized for issuance under the Plan by 2,000,000 shares. 16 Option Exchange Program On June 11, 2021, the Company’s stockholders, upon recommendation of the board of directors of the Company, approved a one-time stock option exchange program (the “Exchange Program”) for certain employee option holders (including its named executive officers) (the “Eligible Participants”) who remained employed by the Company through the completion of the Exchange Program. The Exchange Program permitted Eligible Participants to surrender stock options issued and outstanding under the Plan granted before July 1, 2020, with a per-share exercise price of $ 4.47 or greater (the “Eligible Options”), in exchange for a grant of performance-based restricted stock units (“PRSUs”) that will settle in shares of the Company’s common stock upon vesting. 50 % of the new PRSUs will vest upon the U.S. Food and Drug Administration’s (“FDA”) acceptance of a new drug application for roluperidone, provided that such acceptance is not “over protest” and occurs within three years after the grant date. The remaining new PRSUs will vest upon roluperidone receiving FDA marketing approval provided that such approval occurs within five years after the grant date. On July 6, 2021, the Company filed with the SEC a Tender Offer Statement on Schedule TO disclosing the terms and conditions of the Exchange Program. The Exchange Program closed on August 3, 2021. On August 6, 2021, options to purchase 7,631,844 shares of the Company’s common stock were exchanged for 3,813,150 PRSUs. Options surrendered in the Exchange Program were cancelled and shares subject to the cancelled options again became available for issuance under the Plan . The non-cash incremental stock-based compensation cost associated with the Exchange Program was $ 0.5 million. This incremental cost was measured as the excess of the fair value of each new PRSU, measured as of the date the new PRSUs were granted, over the fair value of the stock options surrendered in exchange for the new PRSU, measured immediately prior to the cancellation. This incremental compensation cost will be recognized when it is deemed probable that the two vesting conditions of the PRSUs will be achieved. Stock Option Awards Stock option activity for employees and non-employees for the nine months ended September 30, 2021 is as follows: Shares Issuable Pursuant to Stock Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (years) Total Intrinsic Value (in thousands) Outstanding January 1, 2021 10,050,523 $ 6.60 7.0 $ — Granted 140,000 $ 2.90 Exercised — $ — Cancelled/Forfeited (1) ( 8,396,056 ) $ 6.94 Outstanding September 30, 2021 1,794,467 $ 4.75 7.8 $ — Exercisable September 30, 2021 913,530 $ 5.99 6.6 $ — Available for future grant 4,762,269 (1) 7,631,844 shares of the Company’s common stock were cancelled during the Exchange Program . The weighted average grant-date fair value of stock options outstanding on September 30, 2021 was $ 3.13 per share. Total unrecognized compensation costs related to non-vested stock options at September 30, 2021 were approximately $ 1.5 million and are expected to be recognized within future operating results over a weighted-average period of 1.2 years. The total intrinsic value of the options exercised during the nine months ended September 30, 2021, and 2020 was zero and approximately $ 0.9 million, respectively. The expected term of the employee-related options was estimated using the “simplified” method as defined by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment . The volatility assumption was determined by examining the historical volatilities for industry peer companies, as the Company did not have sufficient trading history for its common stock. The risk-free interest rate assumption is based on the U.S. Treasury instruments, the term of which was consistent with the expected term of the options. The dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the options. 17 The Company uses the Black-Scholes model to estimate the fair value of stock options granted. For stock options granted during the nine months ended September 30, 2021 and 2020, the Company utilized the following assumptions: Nine Months Ended September 30, 2021 2020 Expected term (years) 5.50 5.50-6.25 Risk free interest rate 0.86 % 0.37%-0.42% Volatility 75 % 68%-71% Dividend yield 0 % 0 % Weighted average grant date fair value per share of common stock $ 1.83 $ 1.62 Restricted Stock Units RSUs awarded to employees generally vest one-fourth per year over four years from the anniversary of the date of grant , provided the employee remains continuously employed with the Company. Shares of the Company’s stock are delivered to the employee upon vesting, subject to payment of applicable withholding taxes. The fair value of RSUs is equal to the closing price of the Company’s common stock on the date of grant. The total unrecognized compensation costs related to non-vested RSUs at September 30, 2021 was zero. There were no unvested RSUs as of September 30, 2021 and December 31, 2020, respectively. Performance-Based Restricted Stock Units On August 6, 2021, the Company granted 3,813,150 PRSUs through the Exchange Program. The Exchange Program was treated as a Type II modification (Probable-to improbable) under ASC 718. The Company will recognize the unrecognized grant-date fair value of the pre-modification stock options as well as any incremental non-cash compensation cost of the PRSUs granted in the Exchange Program, if the vesting conditions of the PRSUs are achieved or if they become probable. The Company is using the pre-modification stock options for determining the compensation cost related to the PRSUs as the vesting conditions remain uncertain for the new PRSUs. The total unrecognized compensation costs related to non-vested stock options at September 30, 2021 were approximately $ 4.5 million and are expected to be recognized within future operating results over a weighted-average period of 1.6 years. As of September 30, 2021, no PRSUs have vested. The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Research and development $ 541,332 $ 813,443 $ 1,826,881 $ 2,189,595 General and administrative 573,194 1,242,592 2,187,769 5,550,109 Total $ 1,114,526 $ 2,056,035 $ 4,014,650 $ 7,739,704 NOTE 9 — COMMITMENTS AND CONTINGENCIES Legal Proceedings Please refer to Note 1 for the Company’s significant risks and uncertainties in regards to litigation. Leases Please refer to Note 10 for the Company’s current lease commitments. NOTE 10 — LEASES Operating leases On October 2, 2017, the Company entered into an office sublease agreement (the “Sublease”) with Profitect, Inc. (the “Sublandlord”) to sublease approximately 5,923 rentable square feet of office space located at 1601 Trapelo Road, Waltham, MA 02451 (the “Premises”). The term of the Sublease began on November 1, 2017 and expired on July 31, 2021 (the “Term”), with a monthly rental rate starting at $ 14,808 and escalating to a maximum monthly rental rate of $ 16,288 in the final 12 months of the Term. The 18 Sublandlord provided the Premises to the Company free of charge for the first two months of the Term. The Company recognized the expense in accordance with ASC 842. Throughout the Term, the Company was responsible for paying certain costs and expenses, in addition to the rent, as specified in the Sublease, including a proportionate share of applicable taxes, operating expenses and utilities. In applying the ASC 842 transition guidance, the Company retained the classification of this Sublease as operating and recorded a lease liability and a right-of-use asset on the ASC 842 effective date. The following table contains a summary of the Sublease costs recognized under ASC 842 and other information pertaining to the Company’s operating Sublease for the nine months ended September 30, 2021: Nine Months Ended September 30, 2021 Sublease cost Operating Sublease cost $ 104,574 Total Sublease cost $ 104,574 Other information Operating cash flows used for operating Sublease $ ( 114,018 ) Weighted average remaining Sublease term 0 years Weighted average discount rate 10 % The Sublease agreement expired on July 31, 2021 and there were no future minimum payments under the Sublease agreement as of September 30, 2021. Future minimum Sublease payments under the Company’s non-cancelable operating Sublease as of December 31, 2020 were as follows: Future Operating Sublease Payments Year Ended December 31, 2020 2021 114,018 Thereafter — Total Sublease payments $ 114,018 Less: imputed interest ( 2,789 ) Total operating Sublease liabilities at December 31, 2020 $ 111,229 On May 5, 2021, the Company entered into an office lease agreement with BP Reservoir Place to lease approximately 5,923 rentable square feet of office space located at 1601 Trapelo Road, Waltham, MA 02451. The term of the lease agreement began on August 1, 2021 and will expire on July 31, 2022, with an annual rate of $239,881.50 payable in equal monthly installments. The Company has elected to not recognize the lease agreement on the balance sheet as the term of the agreement is 12 months or less. Please refer to Note 2 for additional information on ASC 842, Leases . The total operating lease costs during the nine months ended September 30, 2021 were $ 39,980 . Future minimum lease payments under the Company’s non-cancelable operating lease as of September 30, 2021 were as follows: Future Operating Lease Payments Nine Months Ended September 30, 2021 2021 (excluding the nine months ended September 30, 2021) $ 59,970 2022 139,931 Thereafter — Total lease payments $ 199,901 Less: imputed interest — Total operating lease liabilities at September 30, 2021 $ 199,901 19