Minerva Neurosciences, Inc. — Q2 2019 Form 10-Q
Reporting period: Three and six months ended June 30, 2019. Minerva is a clinical-stage CNS biopharmaceutical company developing roluperidone, seltorexant, MIN-117 and MIN-301. It had no approved products and recognized no revenue from product sales or licenses in the periods presented.
Financial performance and liquidity
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $8.3 million | $9.1 million | $19.9 million | $17.5 million |
| General and administrative expense | $4.6 million | $3.9 million | $9.3 million | $8.2 million |
| Net loss | $12.5 million | $12.5 million | $28.3 million | $24.9 million |
| Loss per share, basic and diluted | $0.32 | $0.32 | $0.73 | $0.64 |
| Net cash used in operating activities | Not presented quarterly | $19.7 million | $22.2 million |
At June 30, 2019, cash, cash equivalents, marketable securities and restricted cash totaled $69.4 million, versus $88.1 million at December 31, 2018. Cash and cash equivalents alone were $27.8 million; marketable securities were $41.4 million. Current assets were $70.8 million and current liabilities $7.6 million. Total liabilities were $53.0 million, including $41.2 million of deferred revenue; the company reported no outstanding borrowings. Stockholders’ equity was $67.3 million and accumulated deficit was $242.9 million. Operating margins are not meaningful given the absence of revenue.
Cash and restricted cash declined $22.4 million during the first half of 2019. Investing activities used $3.2 million, reflecting net purchases of marketable securities; financing activities provided $0.5 million from option exercises. The company said existing liquid resources should fund commitments for at least 12 months after the statements’ issuance, but additional capital will be needed to continue operations and fully fund later-stage development.
Changes and significant developments
- Q2 R&D expense decreased $0.8 million year over year, mainly from lower nonclinical and clinical pharmacology costs, partly offset by roluperidone Phase 3 and MIN-117 Phase 2b spending. First-half R&D expense rose $2.4 million, mainly due to those trials.
- Q2 G&A expense increased $0.7 million year over year; first-half expense increased $1.1 million. Management attributed increases primarily to stock-based compensation and staffing for pre-commercial activities.
- First-half net loss increased $3.4 million year over year. Q2 net loss was broadly unchanged. Investment income increased modestly, while interest expense fell to zero after repayment of the term loan in 2018.
- In May, Minerva reported Phase 2b seltorexant adjunctive-MDD results: the 20 mg dose had a week-six MADRS difference versus placebo of 3.1 points, with p=0.083 against the study’s prespecified two-sided 0.1 significance level. The 40 mg dose did not reach statistical significance; 10 mg results were not interpretable due to small sample size.
- In June, Minerva reported positive seltorexant Phase 2b insomnia results: the primary endpoint, latency to persistent sleep at Night 1, improved significantly versus placebo (p≤0.001). The filing also describes improvement on a key sleep-maintenance endpoint and other secondary measures.
Outlook, risks and contingencies
- Management expected roluperidone Phase 3 enrollment to finish in the second half of 2019, with top-line 12-week results in Q4 2019. MIN-117 Phase 2b enrollment was expected to finish in Q3 2019, with results in Q4. Seltorexant MDD2002 results were expected in Q3 2019; enrollment was complete. These are filing-date expectations, not guaranteed outcomes.
- Management expected R&D and G&A spending to increase during 2019 as clinical enrollment and pre-commercial preparation continued. The filing provides no numerical earnings or revenue guidance.
- Minerva has recurring losses and negative operating cash flow. Clinical outcomes, regulatory approval, trial costs and timing are uncertain; failure or delay could harm prospects. Additional financing may dilute shareholders or be unavailable on acceptable terms, potentially requiring programs or operations to be reduced or discontinued.
- The company recognized $41.2 million of deferred revenue related to its Janssen collaboration; recognition depends on future development performance. Janssen agreed to potential $20 million payments at Phase 3 insomnia-trial start and at 50% enrollment. If both parties continue beyond the Phase 2b milestone, Minerva would fund insomnia trials and 40% of Phase 3 MDD costs.
- Minerva reported no known litigation expected to have a material adverse effect and no off-balance-sheet arrangements. Adoption of ASC 842 added approximately $0.4 million each in operating lease right-of-use assets and liabilities, without material impact on the income statement or cash flows.
Important facts for investors to verify
- Whether roluperidone and MIN-117 trial enrollment and results met the timelines stated in this filing, and the clinical and regulatory implications of results.
- Whether the seltorexant Phase 2b findings are confirmed in further trials, including the statistical significance, dose response, safety and relevance of subgroup results.
- Cash burn, liquid resources and financing needs relative to the stated 12-month runway; also monitor any financing-related dilution.
- Janssen collaboration milestones, future funding obligations and the timing and conditions for recognizing deferred revenue.
- Potential share dilution from outstanding options: 8.5 million options, 127,300 restricted stock units and 40,790 warrants were excluded from diluted loss per share as anti-dilutive.