Minerva Neurosciences, Inc. 10-Q

Item 1 – Financial Statements MINERVA NEUROSCIENCES, INC. Condensed Consolidated Balance Sheets (Unaudited) March 31, December 31, 2022 2021 Assets Current assets Cash and cash equivalents $ 54,946,711 $ 60,755,080 Restricted cash 100,000 100,000 Prepaid expenses and other current assets 650,481 1,346,359 Total current assets 55,697,192 62,201,439 Capitalized software, net 51,080 51,080 Goodwill 14,869,399 14,869,399 Total assets $ 70,617,671 $ 77,121,918 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 1,586,168 $ 1,853,215 Accrued expenses and other current liabilities 1,661,518 965,739 Total current liabilities 3,247,686 2,818,954 Liability related to the sale of future royalties 68,106,115 66,327,321 Total liabilities 71,353,801 69,146,275 Commitments and contingencies (Note 8) Stockholders’ equity Preferred stock; $ 0.0001 par value; 100,000,000 shares authorized; none issued or outstanding as of March 31, 2022 and December 31, 2021, respectively — — Common stock; $ 0.0001 par value; 125,000,000 shares authorized; 42,721,566 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 4,272 4,272 Additional paid-in capital 343,725,426 342,672,770 Accumulated deficit ( 344,465,828 ) ( 334,701,399 ) Total stockholders’ equity ( 736,130 ) 7,975,643 Total liabilities and stockholders’ equity $ 70,617,671 $ 77,121,918 See accompanying notes to condensed consolidated financial statements 4 MINERVA NEUROSCIENCES, INC. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 2022 2021 Expenses Research and development 4,959,863 $ 3,258,707 General and administrative 3,029,395 4,248,814 Total expenses 7,989,258 7,507,521 Loss from operations ( 7,989,258 ) ( 7,507,521 ) Foreign exchange losses ( 3,794 ) ( 4,856 ) Investment income 7,417 4,100 Non-cash interest expense for the sale of future royalties ( 1,778,794 ) ( 1,296,456 ) Net loss $ ( 9,764,429 ) $ ( 8,804,733 ) Net loss per share, basic and diluted $ ( 0.23 ) $ ( 0.21 ) Weighted average shares outstanding, basic and diluted 42,721,566 42,721,566 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, 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 Balances at January 1, 2022 42,721,566 $ 4,272 $ 342,672,770 $ ( 334,701,399 ) $ 7,975,643 Stock-based compensation — — 1,052,656 — 1,052,656 Net loss — — — ( 9,764,429 ) ( 9,764,429 ) Balances at March 31, 2022 42,721,566 $ 4,272 $ 343,725,426 $ ( 344,465,828 ) $ ( 736,130 ) See accompanying notes to condensed consolidated financial statements. 6 MINERVA NEUROSCIENCES, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 9,764,429 ) $ ( 8,804,733 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of right-of-use assets — 42,833 Stock-based compensation expense 1,052,656 1,516,064 Non-cash interest expense associated with the sale of future royalties 1,778,794 1,296,456 Changes in operating assets and liabilities Prepaid expenses and other current assets 695,878 533,639 Accounts payable ( 267,047 ) 134,013 Accrued expenses and other current liabilities 695,779 111,248 Operating lease liabilities, current — ( 46,879 ) Net cash used in operating activities ( 5,808,369 ) ( 5,217,359 ) Cash flows from investing activities: Net cash provided by investing activities — — Cash flows from financing activities: Proceeds from the sale of future royalties — 60,000,000 Net cash provided by financing activities — 60,000,000 Net (decrease) increase in cash, cash equivalents and restricted cash ( 5,808,369 ) 54,782,641 Cash, cash equivalents and restricted cash Beginning of period 60,855,080 25,456,952 End of period $ 55,046,711 $ 80,239,593 Reconciliation of the Condensed Consolidated Statements of Cash Flows to the Condensed Consolidated Balance Sheets Cash and cash equivalents $ 54,946,711 $ 80,139,593 Restricted cash 100,000 100,000 Total cash, cash equivalents and restricted cash $ 55,046,711 $ 80,239,593 See accompanying notes to condensed consolidated financial statements. 7 MINERVA NEUROSCIENCES, INC. Notes to Condensed Consolidated Financial Statements As of March 31, 2022 and for the Three Months Ended March 31, 2022 and 2021 (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. 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, a compound 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 was 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 plc (“Royalty Pharma”). For further discussion of the joint development agreement with Janssen and the sale of future royalties, please refer to Note 5, Sale of Future Royalties. 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 March 31, 2022, the Company had an accumulated deficit of approximately $ 344.5 million and net cash used in operating activities was approximately $ 5.8 million during the three months ended March 31, 2022. 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 March 31, 2022, the Company had cash, cash equivalents, and restricted cash of $ 55.0 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 any potential later stage clinical development programs. 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 COVID-19 Pandemic The Company’s business could be adversely affected by the effects of the ongoing COVID-19 pandemic. Beginning in late 2019 and continuing into 2022, the outbreak of COVID-19 has resulted in the declaration of a global pandemic and adversely affected economic activity across virtually all sectors and industries on a local, national, and global scale. 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 8 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 March 31, 2022, the results of operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. The consolidated balance sheet as of December 31, 2021 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, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022. 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. 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. 9 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 March 31, 2022 and December 31, 2021. 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. The Company believes that the impact of recently issued, but not yet adopted, accounting pronouncements will not have a material impact on the condensed consolidated financial statements or do not apply to the Company . NOTE 3 — ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: March 31, 2022 December 31, 2021 Research and development costs and other accrued expenses $ 1,116,122 $ 902,803 Accrued bonus 381,500 — Professional fees 115,912 62,936 Vacation pay 47,984 — Total $ 1,661,518 $ 965,739 NOTE 4 — NET LOSS PER SHARE OF COMMON STOCK Diluted loss per share is the same as basic loss per share for all periods presented as the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. Basic loss per share is computed by dividing net loss 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 per share for common stockholders: Three Months Ended March 31, 2022 2021 Net loss $ ( 9,764,429 ) $ ( 8,804,733 ) Weighted average shares of common stock outstanding 42,721,566 42,721,566 Net loss per share of common stock – basic and diluted $ ( 0.23 ) $ ( 0.21 ) The following securities outstanding at March 31, 2022 and 2021 have been excluded from the calculation of weighted average shares outstanding as their effect on the calculation of loss per share is antidilutive: Three Months Ended March 31, 2022 2021 Common stock options 3,619,467 9,921,311 Performance-based restricted stock units 3,651,403 — Common stock warrants 40,790 40,790 NOTE 5 — SALE OF FUTURE ROYALTIES The Company had previously co-developed seltorexant with Janssen for the treatment of insomnia disorder and adjunctive treatment of MDD. During 2020, the Company exercised its right to opt out of the joint development agreement with Janssen for the future development of seltorexant and, as a result, the Company was 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, the Company entered into an agreement with Royalty Pharma under which Royalty Pharma acquired the Company’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 the Company, including the initial upfront payment of $ 60 million as well as amortized interest expense and potential milestone payments, 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. 10 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 million in potential milestone payments will also be recorded as a liability related to the sale of future royalties and amortized as interest expense 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 March 31, 2022, the Company estimated the effective annual interest rate to be approximately 10.7 %. This estimate contains significant assumptions, which are considered Level 3 fair value inputs, regarding the timing and amount of expected royalty and milestone payments that impact 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 March 31, 2022: March 31, 2022 Upfront payment from the sale of future royalties $ 60,000,000 Non-cash interest expense associated with the sale of future royalties 8,106,115 Liability related to the sale of future royalties $ 68,106,115 NOTE 6 — 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. During the three months ended March 31, 2022, no shares of our common stock were issued or sold under the Sales Agreement. 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 were 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 11 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 March 31, 202 2 . NOTE 7 — 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. 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 three months ended March 31, 2022 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, 2022 2,119,467 $ 4.26 7.9 $ — Granted 1,500,000 $ 0.79 Exercised — $ — Forfeited — $ — Outstanding March 31, 2022 3,619,467 $ 2.82 8.6 $ 58.8 Exercisable March 31, 2022 1,244,466 $ 5.32 6.8 $ — Available for future grant 2,937,269 The weighted average grant-date fair value of stock options outstanding on March 31, 2022 was $ 1.92 per share. Total unrecognized compensation costs related to non-vested stock options at March 31, 2022 were approximately $ 2.16 million and are expected to be recognized within future operating results over a weighted-average period of 2.14 years. The total intrinsic value of the options exercised during the three months ended March 31, 2022, and 2021 was zero . 12 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. The Company uses the Black-Scholes model to estimate the fair value of stock options granted. There were no stock options granted during the three months ended March 31, 2021. For stock options granted during the three months ended March 31, 2022, the Company utilized the following assumptions: Three Months Ended March 31, 2022 Expected term (years) 6.25 Risk free interest rate 1.96 % Volatility 97.18 % Dividend yield 0.00 % Weighted average grant date fair value per share of common stock $ 0.62 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 total PRSUs outstanding at March 31, 2022 was 3,651,403 . 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 March 31, 2022 were approximately $ 2.89 million and are expected to be recognized within future operating results over a weighted-average period of 1.25 years. As of March 31, 2022, no PRSUs have vested and 161,747 have been cancelled. The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations: Three Months Ended March 31, 2022 2021 Research and development $ 501,173 $ 644,176 General and administrative 551,483 871,888 Total $ 1,052,656 $ 1,516,064 NOTE 8 — COMMITMENTS AND CONTINGENCIES Legal Proceedings 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 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 13 lawsuit on behalf of the appointed lead plaintiff. The Court entered the parties’ stipulation of dismissal on July 9, 2021 and closed the case . Leases Please refer to Note 9 for the Company’s current lease commitments. NOTE 9 — LEASES Operating leases 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 . The total operating lease costs during the three months ended March 31, 2022 were $ 59,970 . Future minimum lease payments under the Company’s non-cancelable operating lease as of March 31, 2022 were as follows: Three Months Ended Future Operating Lease Payments March 31, 2022 2022 $ 79,960 Thereafter — Total operating lease liabilities at March 31, 2022 $ 79,960 14