Minerva Neurosciences, Inc. — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018. Minerva is a clinical-stage CNS biopharmaceutical company with no approved products and no product-sale revenue. Its candidates include roluperidone for schizophrenia, seltorexant for insomnia and MDD, MIN-117 for MDD, and MIN-301 for Parkinson’s disease.
Financial results and liquidity
| Metric | Q1 2018 | Q1 2017 / prior balance |
|---|---|---|
| Revenue | No product-sale revenue | No product-sale revenue |
| Research and development expense | $8.45 million | $7.61 million |
| General and administrative expense | $4.29 million | $2.87 million |
| Net loss | $12.42 million | $10.64 million |
| Loss per share, basic and diluted | $0.32 | $0.30 |
| Operating cash used | $10.93 million | $6.04 million |
| Cash, cash equivalents and restricted cash | $45.23 million | $68.97 million at March 31, 2017 |
| Marketable securities | $75.87 million | $107.13 million at December 31, 2017, including noncurrent securities |
| Notes payable | $2.70 million current carrying amount | $3.96 million at December 31, 2017 |
Cash, cash equivalents, restricted cash and marketable securities totaled approximately $121.1 million at quarter-end. Management believes these resources will fund cash commitments for at least 12 months after issuance of the statements, while noting that additional capital will be needed to fund later-stage development. Total liabilities were $53.18 million, including $41.18 million of deferred revenue and $4.06 million of deferred taxes. The company reported an accumulated deficit of $176.8 million. No operating margin is meaningful given the absence of revenue.
Changes versus the comparable quarter
- Net loss increased by $1.77 million. R&D expense rose $0.83 million, mainly from roluperidone Phase 3 and MIN-117 Phase 2b work; lower seltorexant costs partly offset the increase. G&A expense rose $1.42 million, driven mainly by stock compensation and staffing.
- Operating cash use increased by $4.89 million, including a $2.94 million increase in prepaid expenses. Investing activities provided $31.32 million, principally from maturities and redemptions of marketable securities; this was primarily a shift in liquid investments, not operating cash generation.
- Investment income increased to $0.41 million from $0.06 million. Interest expense declined to $0.07 million from $0.20 million as the loan balance fell.
- Weighted-average shares increased to 38.75 million from 35.37 million, while quarter-end shares were 38.75 million.
Outlook, developments and risks
- Roluperidone’s pivotal Phase 3 trial was underway; top-line results for its 12-week blinded phase were expected in the first half of 2019.
- Minerva initiated the MIN-117 Phase 2b MDD trial on April 9, 2018, with top-line results expected in the first half of 2019.
- Seltorexant’s Phase 2b MDD comparison trial was temporarily paused because of a packaging issue; the issue was resolved, and enrollment was expected to restart in Q2 2018. The company also had an insomnia Phase 2b trial underway.
- Minerva reported that Janssen’s 2017 amendment provided a $30 million upfront payment and deferred recognition of that payment and $11.2 million of forgiven collaborative expenses until development services are performed. Janssen agreed to two further $20 million payments tied to a Phase 3 insomnia trial. The company expected to reach its Phase 2b development decision point in the second half of 2019.
- The Oxford Finance/Silicon Valley Bank term loan carried a fixed 7.05% rate, matured August 1, 2018, and was secured by substantially all assets other than intellectual property. Minerva reported covenant compliance and expected approximately $2.2 million of principal repayment during 2018.
- Management expects losses and negative operating cash flows to continue, with R&D and G&A expenses expected to rise during 2018. Future financing may dilute shareholders or require unfavorable terms; if financing is unavailable, programs may be delayed, scaled back, or discontinued. Clinical, regulatory, intellectual-property, competition, and execution risks remain significant.
- The filing reported no known material litigation, no material changes to contractual obligations, and no off-balance-sheet arrangements. Disclosure controls were assessed as effective at a reasonable assurance level.
Important facts for investors to verify
- Whether cash burn and clinical-trial spending remain consistent with the stated minimum 12-month runway, and when additional financing may be required.
- Roluperidone and MIN-117 enrollment, trial execution, and anticipated first-half 2019 readouts.
- Resolution and restart of seltorexant MDD enrollment, and progress toward its Phase 2b decision point and related Janssen milestones.
- The August 2018 loan maturity, repayment schedule, and any associated covenant or collateral implications.
- How and when the $41.2 million deferred revenue balance will be recognized, and the conditions attached to future Janssen payments.
- Potential dilution from future equity financing and stock-based compensation; the filing disclosed $2.1 million of Q1 stock-based compensation expense.