Minerva Neurosciences, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Minerva is a clinical-stage biopharmaceutical company developing CNS treatments; it has no approved products and reported no product revenue.
Key financial metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Research and development expense | $2.37 million | $4.51 million | $11.46 million | $13.29 million |
| General and administrative expense | $2.84 million | $3.00 million | $8.70 million | $10.70 million |
| Total expenses / operating loss | $5.21 million | $7.52 million | $20.16 million | $23.99 million |
| Net loss | $6.90 million | $9.21 million | $25.38 million | $28.60 million |
| Net loss per share, basic and diluted | $1.29 | $1.72 | $4.75 | $5.36 |
- Cash and liquidity: Cash, cash equivalents and restricted cash totaled $40.32 million at September 30, 2022, down $20.54 million from year-end 2021. Operating cash use was $20.54 million for the first nine months of 2022, versus $19.77 million in 2021. Current assets were $44.84 million and current liabilities were $2.20 million.
- Balance sheet: Total liabilities were $74.00 million, including a $71.81 million liability for the sale of future seltorexant royalties. Stockholders’ deficit was $14.25 million; accumulated deficit was $360.08 million. The filing reports no conventional term-loan balance.
- Margins: Not meaningful; Minerva reported no product revenue and no operating income.
Material changes and notable items
- Net loss narrowed year over year in both the quarter and nine-month period, primarily as research and development and general and administrative expenses declined. R&D costs fell mainly because the roluperidone Phase 3 open-label extension had been completed in 2021; higher NDA-related consulting costs partly offset the decrease.
- Cash used in operations remained higher than the prior-year period despite lower net loss, including a $3.12 million cash outflow for an FDA application fee. The FDA granted the company’s small-business fee-waiver request on November 2, 2022.
- Non-cash interest expense on the Royalty Pharma obligation was $5.48 million for the first nine months, versus $4.59 million in 2021. The liability reflects the $60 million upfront royalty-sale payment received in 2021 and estimated interest accretion; up to $95 million of additional payments are contingent on seltorexant milestones.
- In September 2022, Minerva established an at-the-market offering agreement; $22.6 million was eligible for sale under its registration statement at quarter-end, but no shares had been sold under the agreement through September 30.
- A 1-for-8 reverse stock split took effect June 17, 2022. The company transferred its listing from Nasdaq Global Market to Nasdaq Capital Market on September 12.
Outlook, risks and contingencies
- Roluperidone: On October 17, 2022, Minerva announced that the FDA had issued a Refusal to File letter for its NDA for negative symptoms of schizophrenia. The company requested a Type A meeting and anticipated it before year-end 2022. This is a significant regulatory setback; the filing does not provide a revised approval timeline.
- Management expects continuing operating losses and negative operating cash flows, and stated existing cash should cover commitments for at least 12 months after issuance of the financial statements. The company also says it will need additional capital to continue operations and fund potential later-stage development; financing may be unavailable or dilutive, and failure to obtain it could require scaling back or discontinuing operations.
- Risks include clinical and regulatory uncertainty, ability to raise capital, Nasdaq continued-listing compliance, potential clinical-trial disruption from COVID-19, and data privacy and cybersecurity exposures. The company disclosed a prior contractor cyberattack in 2019 that disrupted roluperidone Phase 3 patient recruitment.
- Minerva reported no legal proceedings or claims that it believed would have a material adverse effect. Management concluded disclosure controls were effective at a reasonable assurance level as of September 30, 2022.
Important facts for investors to verify
- What the FDA’s Refusal to File letter requires, the outcome and timing of the requested Type A meeting, and the implications for roluperidone’s development and NDA strategy.
- Whether the $40.3 million cash balance and management’s stated 12-month runway remain adequate given clinical plans, the fee waiver, and ongoing cash burn.
- Potential financing needs and actual use of the $22.6 million ATM capacity, including dilution and Nasdaq listing compliance.
- How assumptions about seltorexant milestones and future royalties affect the $71.8 million royalty-obligation balance and subsequent non-cash interest expense.
- Progress and funding requirements for MIN-301 and Janssen’s seltorexant program; no commercial revenue or assurance of milestone payments is reported.