Minerva Neurosciences, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019; unaudited. Minerva is a clinical-stage CNS biopharmaceutical company with no approved products and no product-sales revenue.
Financial performance and position
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $11.6 million | $8.4 million; up about $3.2 million |
| General and administrative expense | $4.7 million | $4.3 million; up about $0.4 million |
| Total expenses / operating loss | $16.3 million / $(16.3) million | $12.7 million / $(12.7) million |
| Net loss | $(15.8) million; $(0.41) per share | $(12.4) million; $(0.32) per share |
| Operating cash flow | $(9.6) million | $(10.9) million |
| Cash, cash equivalents, marketable securities and restricted cash | $79.3 million at March 31 | $88.1 million at December 31, 2018 |
Cash and cash equivalents were $30.6 million and marketable securities were $48.6 million at quarter-end. Total assets were $129.8 million, total liabilities $52.4 million, and stockholders’ equity $77.4 million. Accumulated deficit was $230.4 million. The company had no outstanding borrowings; its prior term loans were repaid in August 2018. Gross profit and operating margins are not meaningful because the company reported no revenue.
Cash and cash equivalents plus restricted cash declined by $19.6 million during the quarter. Investing cash use of $10.6 million primarily reflected purchases of marketable securities, which are a reallocation of liquid funds. Financing provided $0.5 million from option exercises.
Material changes and unusual items
- R&D expense rose primarily due to increased spending on the roluperidone Phase 3 and MIN-117 Phase 2b trials. Management expected R&D and G&A expenses to increase during 2019.
- Net loss increased by $3.4 million year over year. Investment income rose to $0.5 million from $0.4 million; interest expense fell to zero from $0.1 million after repayment of the term loans.
- Deferred revenue was $41.2 million, unchanged from year-end. It includes Janssen’s $30 million upfront payment and $11.2 million of forgiven accrued collaborative expenses, to be recognized as the related development services are performed.
- Adoption of lease accounting on January 1, 2019 added approximately $0.4 million each in operating lease right-of-use assets and liabilities, with no material income-statement or cash-flow effect.
Outlook, programs and risks
- Management said existing cash, cash equivalents, restricted cash and marketable securities were expected to fund commitments for at least 12 months after issuance of the statements. The company expects continuing operating losses and negative operating cash flow and said additional capital will be needed for later-stage development; financing may not be available on acceptable terms.
- Roluperidone: approximately 500-patient Phase 3 trial for schizophrenia negative symptoms was enrolling. Management expected enrollment completion in the second half of 2019 and topline results in Q4 2019.
- MIN-117: approximately 324-patient Phase 2b MDD trial was recruiting. Expected enrollment completion was Q3 2019 and topline results Q4 2019.
- Seltorexant: enrollment was complete in the Phase 2b MDD trials, with topline results expected in Q2 and Q3 2019; enrollment was also complete in the insomnia trial, with results expected in Q2 2019. Under the Janssen arrangement, potential payments include $20 million at Phase 3 insomnia-trial start and $20 million at 50% enrollment; future obligations and economics depend on development decisions and opt-out rights.
- MIN-301 remained in preclinical development; the company planned further studies before an IND or IMPD filing and a potential Phase 1 study.
- Key risks include clinical-trial failure or delay, regulatory approval uncertainty, competition, dependence on additional funding, and possible dilution or restrictions from future financing. Management reported no known material litigation and no off-balance-sheet arrangements. Disclosure controls were considered effective at a reasonable-assurance level.
Important facts for investors to verify
- Whether the stated 2019 trial enrollment and topline-result timelines were achieved, and the clinical efficacy and safety results.
- Actual cash burn and the duration of the claimed 12-month liquidity runway, considering trial spending and funding needs.
- Janssen collaboration milestones, opt-out decisions, and the timing and conditions for recognizing the $41.2 million deferred revenue.
- Future financing availability and its potential dilution or impact on development plans.
- Whether reported preclinical findings and pipeline candidates translate into clinical benefit and regulatory progress.