Financial Performance - The company reported an accumulated deficit of $366.8 million as of December 31, 2022, compared to $334.7 million in 2021, indicating a net loss of $32.1 million for 2022, down from $49.9 million in 2021 [370]. - The net loss for the year ended December 31, 2022, was $32.1 million, compared to a net loss of $49.9 million in 2021, indicating an improvement of approximately 35.9% [392]. - The company has not generated any revenue from product sales to date and anticipates continued net losses as it develops its product candidates [399]. Research and Development - Research and development expenses for roluperidone were $12.6 million in 2022, a decrease from $14.4 million in 2021, reflecting the company's strategic focus on this lead drug candidate [385]. - Research and development expenses were $14.6 million in 2022, down from $32.0 million in 2021, reflecting a decrease of $17.4 million [393]. - Research and development costs are expensed as incurred, including licensing fees and salaries related to R&D functions [418]. - Payments under research contracts may depend on successful patient enrollment and completion of clinical trial milestones, leading to potential variability in expense recognition [418]. - The company capitalizes incomplete research projects acquired through business combinations as indefinite-lived intangible assets, subject to impairment testing [420]. Regulatory and Development Updates - The NDA for roluperidone was submitted in August 2022 but was met with a refusal to file letter from the FDA in October 2022, which remains in effect [369]. - The company anticipates ongoing discussions with the FDA regarding the status of the roluperidone NDA and development program [372]. - The company deferred the development of MIN-301 due to limited resources, resulting in a non-cash impairment charge of $15.2 million in 2021 [382]. Cash and Capital Management - As of December 31, 2022, the company had approximately $36.2 million in cash, cash equivalents, and restricted cash, expected to meet operating commitments for the next 12 months [399]. - The company plans to raise additional capital or seek product collaborations to support the development and commercialization of its product candidates [385]. Royalties and Agreements - The company sold its rights to potential royalties from seltorexant to Royalty Pharma for $60 million, with additional milestone payments of up to $95 million contingent on the completion of Phase 3 trials [379]. - The company entered into an agreement with Royalty Pharma for an upfront payment of $60 million for its royalty interest in seltorexant, with potential additional milestone payments of up to $95 million [403]. - The company recognized $1.9 million and $7.4 million in non-cash interest expense related to the royalty agreement for the three and twelve months ended December 31, 2022, respectively [380]. - Non-cash interest expense for the sale of future royalties rose to $7.4 million in 2022 from $6.3 million in 2021, an increase of $1.1 million [397]. - As of December 31, 2022, the company recorded a liability related to the sale of future royalties amounting to $60 million, with potential additional milestone payments of up to $95 million [427]. Impairment and Goodwill - The company recognized a non-cash charge of $15.2 million for the impairment of the MIN-301 intangible asset as of December 31, 2021, due to a strategic decision to focus on the lead drug candidate, roluperidone [422]. - The company has not recognized any impairment of goodwill for the years ended December 31, 2022, and 2021, with $14.9 million of goodwill associated with a reporting unit having zero or negative carrying value [424]. - The company tests its indefinite-lived intangibles, including IPR&D assets, for impairment annually, with no impairments recognized for the years ended December 31, 2022, and 2021 [421]. Tax and Interest - Deferred tax assets are evaluated for realization based on a more-likely-than-not criterion, with no interest or penalties related to income taxes for the years ended December 31, 2022, or 2021 [426]. - The effective annual interest rate estimated by the company as of December 31, 2022, was approximately 10.7%, with a 20% increase in clinical success probability potentially increasing non-cash interest expense by $37.7 million [428]. Stock and Shareholder Information - A reverse stock split of 1-for-8 was executed on June 17, 2022, reducing the number of outstanding shares from 42,721,566 to 5,340,193 [412].

Financial Data and Key Metrics Changes - Cash, cash equivalents, and restricted cash as of September 30, 2022, were approximately $40.3 million, down from $60.9 million as of December 31, 2021, indicating a decrease of about 33.5% [18] - Net loss for the third quarter of 2022 was $6.9 million, or a net loss per share of $1.29, compared to a net loss of $9.2 million, or a net loss per share of $1.72 for the same period in 2021, showing an improvement in loss [27] - For the nine months ended September 30, 2022, net loss was $25.4 million, or a net loss per share of $4.75, compared to a net loss of $28.6 million, or a net loss per share of $5.36 for the same period in 2021, also indicating a reduction in loss [27] Business Line Data and Key Metrics Changes - Research and development (R&D) expenses for the three months ended September 30, 2022, were $2.4 million, down from $4.5 million in the same period of 2021, a decrease of approximately 46.7% [20] - For the nine months ended September 30, 2022, R&D expenses were $11.5 million, down from $13.3 million in the same period of 2021, a decrease of approximately 13.5% [21] - General and administrative (G&A) expenses for the three months ended September 30, 2022, were $2.8 million, down from $3 million in the same period of 2021, a decrease of approximately 6.7% [23] - For the nine months ended September 30, 2022, G&A expenses were $8.7 million, down from $10.7 million in the same period of 2021, a decrease of approximately 18.7% [24] Company Strategy and Development Direction - The company submitted its NDA for roluperidone to treat negative symptoms in schizophrenia to the FDA, highlighting a significant unmet medical need as there are no approved drugs in the U.S. for this condition [9][12] - The company is focused on roluperidone as a monotherapy for a specific sub-population of schizophrenia patients who do not require continuous treatment with antipsychotics for positive symptoms [15] - The company plans to discuss the FDA's refusal to file letter in a Type A meeting, which is expected to clarify the path forward for the NDA submission [11][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming Type A meeting with the FDA, which is expected to provide clarity on the NDA submission and the issues raised in the refusal to file letter [30][34] - The company is also working on an early-stage pipeline, although the primary focus remains on roluperidone as it is a late-stage asset and a key value driver [57] Other Important Information - The company filed a shelf registration statement on Form S-3 to register up to $200 million in new shares of common stock, indicating potential future capital raising efforts [18] - As of September 30, 2022, an aggregate of $22.6 million was eligible for sale under the effective registration statement [19] Q&A Session Summary Question: Can the company infer whether the FDA is comfortable with any of the issues previously outlined? - Management indicated that discussions with the FDA have been ongoing and that the upcoming Type A meeting will help clarify the situation [30] Question: What dynamics would need to play out before considering another study for roluperidone? - Management stated that clarity from the Type A meeting will determine the next steps, including whether another study is necessary [33] Question: Did the FDA provide specific reasons for the refusal to file letter? - Management confirmed that the FDA provided reasons, which will be discussed in the Type A meeting [43] Question: Is the company working on other assets in the pipeline? - Management confirmed that while the focus is on roluperidone, there is an early-stage pipeline that is being developed, albeit at a slower pace [57]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 001-36517 Minerva Neurosciences, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 26-0784194 (State or Other Jurisdictio ...

PART I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2022 financial statements report a net loss of $18.5 million, a $8.4 million stockholders' deficit, and a 1-for-8 reverse stock split - On June 17, 2022, the company effected a **1-for-8 reverse stock split** of its common stock, with all share and per-share amounts retroactively adjusted[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - In January 2021, the company sold its royalty interest in seltorexant for a **$60 million upfront payment**, with the liability growing to **$69.9 million** by June 30, 2022, due to accrued non-cash interest[46](index=46&type=chunk)[48](index=48&type=chunk) Condensed Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2022 ($) | December 31, 2021 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $49,753,998 | $60,755,080 | | Total assets | $64,959,298 | $77,121,918 | | Liability related to the sale of future royalties | $69,932,614 | $66,327,321 | | Total liabilities | $73,341,542 | $69,146,275 | | Total stockholders' (deficit) equity | $(8,382,244) | $7,975,643 | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2022 ($) | Three Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2021 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,131,978 | $5,520,928 | $9,091,841 | $8,779,635 | | General and administrative | $2,833,211 | $3,442,365 | $5,862,606 | $7,691,179 | | Net loss | $(8,717,714) | $(10,589,163) | $(18,482,143) | $(19,393,896) | | Net loss per share, basic and diluted | $(1.63) | $(1.98) | $(3.46) | $(3.63) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Six Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2021 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,001,077) | $(11,142,185) | | Net cash provided by financing activities | $(5) | $60,000,000 | | Net (decrease) increase in cash | $(11,001,082) | $48,857,815 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses roluperidone NDA preparation, Q2 2022 operating expense decreases, and the sufficiency of $49.9 million cash for the next 12 months - The company is preparing for a potential **NDA submission for roluperidone in Q3 2022**, despite FDA concerns regarding Phase 2b study applicability and post hoc analyses for the Phase 3 study[73](index=73&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) - As of June 30, 2022, the company had approximately **$49.9 million** in cash, cash equivalents, and restricted cash, believed sufficient for **at least the next 12 months**[97](index=97&type=chunk) - Net cash used in operating activities for the six months ended June 30, 2022, was **$11.0 million**, primarily due to a net loss of **$18.5 million**, offset by non-cash expenses[105](index=105&type=chunk) Operating Expense Comparison (Q2 2022 vs Q2 2021) | Expense Category | Q2 2022 ($ millions) | Q2 2021 ($ millions) | Change ($ millions) | | :--- | :--- | :--- | :--- | | Research & Development | $4.1 million | $5.5 million | -$1.4 million | | General & Administrative | $2.8 million | $3.4 million | -$0.6 million | [Quantitative and Qualitative Disclosures about Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports this section is not applicable - Not applicable[115](index=115&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[117](index=117&type=chunk) - There were **no material changes** in internal control over financial reporting during the quarter[118](index=118&type=chunk) PART II — Other Information [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any legal proceedings expected to have a material adverse effect on its business - As of the report date, the company is **not party to any claim or litigation** that is expected to have a **material adverse effect** on its business[120](index=120&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors include significant accumulated losses, need for additional capital, potential Nasdaq delisting due to equity deficiency, and regained bid price compliance - The company has a history of **significant losses**, with an **accumulated deficit of $353.2 million** as of June 30, 2022, and expects to continue incurring losses[123](index=123&type=chunk)[124](index=124&type=chunk) - The company will require **additional capital** to finance operations, with existing cash of **$49.9 million** deemed sufficient for **at least the next 12 months**, though future financing is not guaranteed[126](index=126&type=chunk)[127](index=127&type=chunk) - On March 8, 2022, the company received a **deficiency letter from Nasdaq** for not meeting the **$10 million stockholders' equity requirement**, but was granted an **extension until September 5, 2022**, to regain compliance[156](index=156&type=chunk) - The company **regained compliance** with Nasdaq's **$1.00 minimum bid price requirement** on July 6, 2022, following a **1-for-8 reverse stock split** implemented in June 2022[155](index=155&type=chunk) - The company is subject to **evolving U.S. and foreign data privacy and security laws**, and non-compliance could lead to **significant penalties, litigation, and reputational harm**[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - None[159](index=159&type=chunk) [Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports this section is not applicable - Not applicable[160](index=160&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports this section is not applicable - Not applicable[161](index=161&type=chunk) [Other Information](index=29&type=section&id=Item%205.%20Other%20Information) The company reports this section is not applicable - Not applicable[162](index=162&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including the Certificate of Amendment for the reverse stock split and Sarbanes-Oxley certifications - Lists exhibits filed with the report, including the **Certificate of Amendment** to the Amended and Restated Certificate of Incorporation effective June 17, 2022, and **Sarbanes-Oxley certifications**[164](index=164&type=chunk)

Financial Performance - The company reported an accumulated deficit of approximately $344.5 million as of March 31, 2022, and anticipates continued net losses for the foreseeable future [89]. - The company has incurred significant operating losses every year since inception and expects to continue incurring negative cash flow from operating activities [68]. - Net cash used in operating activities was approximately $5.8 million for the three months ended March 31, 2022, compared to $5.2 million for the same period in 2021, primarily due to net losses of $9.8 million and $8.8 million respectively [96][97][98]. Cash and Liquidity - As of March 31, 2022, the company had approximately $55.0 million in cash, cash equivalents, and restricted cash, which is expected to meet cash commitments for at least the next 12 months [89]. - The existing cash, cash equivalents, and restricted cash are believed to be sufficient to meet cash commitments for at least the next 12 months [94]. - Net cash provided by financing activities was $60 million during the three months ended March 31, 2021, resulting from the sale of future royalties, while there was no cash provided from financing activities in the same period of 2022 [100]. Expenses - Research and development expenses increased to $5.0 million for Q1 2022, up from $3.3 million in Q1 2021, representing a 51.5% increase primarily due to higher consulting fees related to NDA support activities [84]. - General and administrative expenses decreased to $3.0 million for Q1 2022, down from $4.2 million in Q1 2021, a reduction of approximately 28.6% due to lower staffing and legal costs [85]. - Non-cash interest expense for the sale of future royalties increased to $1.8 million in Q1 2022 from $1.3 million in Q1 2021, reflecting a 38.5% increase due to a higher effective interest rate [88]. - Stock-based compensation expense was $1.1 million for the three months ended March 31, 2022, compared to $1.5 million for the same period in 2021 [97][98]. Future Outlook - The company is preparing for a potential NDA submission for roluperidone during Q3 2022, contingent on FDA feedback [77]. - The company anticipates needing to raise additional capital or seek product collaborations to complete the development and commercialization of its product candidates [80]. - Future capital requirements will depend on various factors, including the size and timing of clinical trials and strategic partnering activities [94]. - The uncertainty in capital markets due to the COVID-19 pandemic may negatively impact the availability and cost of capital for the company [94]. Operational Activities - The company has completed the Open-label extension of the Phase 3 study for roluperidone, focusing on negative symptoms of schizophrenia [70]. - The company has not generated any revenue from product sales and relies on collaborative revenue from the sale of royalty interests in seltorexant, which was sold to Royalty Pharma for an upfront payment of $60 million [92]. - The company reported a decrease in accounts payable of $0.3 million during the three months ended March 31, 2022, which contributed to the net cash used in operating activities [97]. Accounting Policies - The company has identified critical accounting policies related to research and development costs and the liability related to the sale of future royalties as significant for its financial status [101]. - There were no cash flows from investing activities for both the three months ended March 31, 2022, and 2021 [99].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-36517 Minerva Neurosciences, Inc. (Exact name of Registrant as specified in its Charter) Delaware 26-0784194 (State or other jurisdic ...

Minerva Neurosciences, Inc. (NASDAQ:NERV) Q3 2021 Results Earnings Conference Call November 8, 2021 8:30 AM ET Company Participants Geoff Race - President Remy Luthringer - Chief Executive Officer Frederick Ahlholm - Chief Financial Officer Conference Call Participants Andrew Tsai - Jefferies Thomas Shrader - BTIG Jason Butler - JMP Securities Douglas Tsao - H.C. Wainwright Operator Welcome to the Minerva Neurosciences Third Quarter 2021 Call. At this time, all participants are in a listen-only mode. There ...

[PART I — Financial Information](index=4&type=section&id=PART%20I%20%E2%80%94%20Financial%20Information) [Financial Statements](index=4&type=page&id=Item%201.%20Financial%20Statements) Minerva Neurosciences reported a net loss for the nine months ended September 30, 2021, primarily due to absent collaborative revenue, while its balance sheet strengthened from a **$60 million** royalty sale [Condensed Consolidated Balance Sheets](index=4&type=page&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets increased to **$97.6 million** driven by higher cash, while total liabilities grew substantially to **$69.5 million** due to a **$64.6 million** royalty sale liability, leading to a decrease in stockholders' equity | Balance Sheet Highlights | Sep 30, 2021 (USD) | Dec 31, 2020 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $65,588,119 | $25,356,952 | | Total current assets | $67,438,570 | $27,440,216 | | Total assets | $97,559,049 | $57,626,209 | | **Liabilities & Equity** | | | | Total current liabilities | $3,082,760 | $3,160,252 | | Liability related to the sale of future royalties | $64,594,985 | $— | | Total liabilities | $69,481,101 | $4,963,608 | | Total stockholders' equity | $28,077,948 | $52,662,601 | [Condensed Consolidated Statements of Operations](index=5&type=page&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the nine months ended September 30, 2021, the company reported a net loss of **$28.6 million**, a significant shift from **$9.3 million** net income in 2020, primarily due to the absence of **$41.2 million** collaborative revenue and new non-cash interest expense | Statement of Operations (Nine Months Ended Sep 30) | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Collaborative revenue | $— | $41,175,600 | | Research and development | $13,292,488 | $18,488,108 | | General and administrative | $10,695,944 | $13,541,253 | | Non-cash interest expense for the sale of future royalties | $4,594,985 | $— | | **Net (loss) income** | **($28,599,303)** | **$9,265,598** | | **Net (loss) income per share, basic** | **($0.67)** | **$0.23** | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=page&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased from **$52.7 million** to **$28.1 million** as of September 30, 2021, primarily due to the **$28.6 million** net loss, partially offset by stock-based compensation - The accumulated deficit increased from **$(284.8) million** at the start of 2021 to **$(313.4) million** by the end of Q3 2021, reflecting the net loss incurred during the period[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=page&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, net cash used in operating activities was **$19.8 million**, while **$60 million** from the sale of future royalties led to a **$40.2 million** net increase in cash, bringing the total to **$65.7 million** | Cash Flow (Nine Months Ended Sep 30) | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | ($19,768,833) | ($26,663,142) | | Net cash provided by investing activities | $— | $24,528,294 | | Net cash provided by financing activities | $60,000,000 | $13,238,058 | | **Net increase in cash, cash equivalents and restricted cash** | **$40,231,167** | **$11,103,210** | - The primary source of cash in 2021 was the **$60 million** received from the sale of future royalties, whereas in 2020, financing was sourced from public stock offerings (**$12.6 million**) and stock option exercises (**$1.1 million**)[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=page&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide details on the company's operations, liquidity, and significant events, including the **$60 million** sale of seltorexant royalty rights, which is treated as debt, and management's belief that existing cash of **$65.7 million** is sufficient for at least the next 12 months - The company is a clinical-stage biopharmaceutical firm focused on CNS diseases with lead candidates roluperidone and MIN-301[23](index=23&type=chunk) - Management believes existing cash of **$65.7 million** is sufficient for at least the next 12 months, but acknowledges the need to raise additional capital for later-stage clinical development[26](index=26&type=chunk)[27](index=27&type=chunk) - In January 2021, the company sold its royalty interest in seltorexant to Royalty Pharma for an upfront payment of **$60 million** and up to **$95 million** in potential milestones, accounted for as debt, resulting in a liability of **$64.6 million** as of September 30, 2021[77](index=77&type=chunk)[80](index=80&type=chunk) - A stock option exchange program was completed in August 2021, where options to purchase **7.6 million** shares were exchanged for **3.8 million** performance-based restricted stock units (PRSUs)[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=page&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the roluperidone NDA timeline despite FDA feedback, noting decreased R&D and G&A expenses, a shift to net loss due to absent collaborative revenue, and bolstered liquidity from a **$60 million** Royalty Pharma payment [Clinical and Regulatory Update](index=20&type=page&id=Clinical%20and%20Regulatory%20Update) The 40-week open-label extension of the Phase 3 trial for roluperidone showed continued improvement in negative symptoms and was well-tolerated, and a pivotal bioequivalence study met its objectives, despite the FDA denying a pre-NDA meeting - The FDA denied a pre-NDA meeting for roluperidone, recommending a Type C guidance meeting instead, but the company still plans to submit an NDA in the first half of 2022[105](index=105&type=chunk) - Results from the 40-week open-label extension of the Phase 3 trial showed mean improvements in negative symptoms and functional scores, with a relapse rate of **11.7%** over one year[107](index=107&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - A pivotal bioequivalence study successfully demonstrated comparability between the clinical trial formulations of roluperidone and the planned commercial formulation[114](index=114&type=chunk) [Results of Operations](index=22&type=page&id=Results%20of%20Operations) For the nine months ended September 30, 2021, R&D expenses decreased by **$5.2 million** and G&A expenses fell by **$2.8 million**, while the absence of **$41.2 million** in collaborative revenue and a new **$4.6 million** non-cash interest expense significantly impacted net results | Expense Comparison (Nine Months Ended Sep 30) | 2021 (in millions USD) | 2020 (in millions USD) | Change (in millions USD) | | :--- | :--- | :--- | :--- | | Research and Development | $13.3M | $18.5M | ($5.2M) | | General and Administrative | $10.7M | $13.5M | ($2.8M) | - The decrease in collaborative revenue by **$41.2 million** was the primary reason for the shift from net income in 2020 to a net loss in 2021[130](index=130&type=chunk) - A new non-cash interest expense of **$4.6 million** was recorded in the first nine months of 2021 due to the sale of the seltorexant royalty interest[136](index=136&type=chunk) [Liquidity and Capital Resources](index=24&type=page&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, the company had **$65.7 million** in cash, significantly bolstered by a **$60 million** upfront payment from Royalty Pharma, which management believes is sufficient for at least the next 12 months, though additional capital will be needed for future development - The company had cash, cash equivalents, and restricted cash of approximately **$65.7 million** at September 30, 2021[137](index=137&type=chunk) - In January 2021, the company received a **$60 million** upfront payment from Royalty Pharma for its royalty interest in seltorexant[137](index=137&type=chunk)[141](index=141&type=chunk) - Management believes existing cash is sufficient to fund operations for at least the next 12 months[137](index=137&type=chunk)[144](index=144&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=27&type=page&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable to the company for the reporting period - The company has indicated that there are no applicable quantitative and qualitative disclosures about market risk to report[159](index=159&type=chunk) [Controls and Procedures](index=27&type=page&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the third quarter - Management concluded that disclosure controls and procedures were effective as of September 30, 2021[161](index=161&type=chunk) - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[162](index=162&type=chunk) [PART II — Other Information](index=28&type=section&id=PART%20II%20%E2%80%94%20Other%20Information) [Legal Proceedings](index=28&type=page&id=Item%201.%20Legal%20Proceedings) A consolidated securities class action lawsuit against the company regarding roluperidone development was voluntarily dismissed and the case officially closed in July 2021 - A securities class action lawsuit alleging misleading statements about the drug candidate roluperidone was voluntarily dismissed, and the case was closed by the court on July 9, 2021[165](index=165&type=chunk) [Risk Factors](index=28&type=page&id=Item%201A.%20Risk%20Factors) The company highlights key risks including a history of significant losses with an accumulated deficit of **$313.4 million**, the need for additional capital, potential stockholder dilution, and ongoing COVID-19 pandemic impacts - The company has a history of significant losses, with an accumulated deficit of **$313.4 million** as of September 30, 2021, and expects to incur further losses[167](index=167&type=chunk)[168](index=168&type=chunk) - Additional capital is required to finance operations, and there is no guarantee that it will be available on acceptable terms, with failure to secure funding potentially forcing the company to delay or discontinue development programs[169](index=169&type=chunk)[170](index=170&type=chunk) - The COVID-19 pandemic poses ongoing risks to the business, including potential delays in clinical trials, disruptions to operations, and negative impacts on financial markets and the ability to raise capital[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=page&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the reporting period - The company reported no unregistered sales of equity securities[175](index=175&type=chunk) [Exhibits](index=31&type=page&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and required CEO and CFO certifications - The report includes standard corporate governance documents and required CEO/CFO certifications as exhibits[181](index=181&type=chunk)

Minerva Neurosciences, Inc. (NASDAQ:NERV) Q2 2021 Results Conference Call August 2, 2021 8:30 AM ET Company Participants William Boni - Vice President, Investor Relations & Corporate Communications Remy Luthringer - Executive Chairman & Chief Executive Officer Geoff Race - Executive Vice President, Chief Financial Officer & Chief Business Officer Conference Call Participants Andrew Tsai - Jefferies Myles Minter - William Blair Jason Butler - JMP Securities Douglas Tsao - H.C. Wainwright Operator Welcome to ...

PART I — Financial Information Presents the unaudited condensed consolidated financial statements and related disclosures for the company [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited):) Presents Minerva Neurosciences' unaudited condensed consolidated financial statements and detailed notes for Q2 2021 and 2020 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202021%20and%20December%2031%2C%202020) Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2021, and December 31, 2020 | Metric | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :-------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | **$74,214,767** | **$25,356,952** | | Total current assets | **$75,225,344** | **$27,440,216** | | Total assets | **$105,324,490** | **$57,626,209** | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | **$4,444,410** | **$3,160,252** | | Liability related to sale of future royalties | **$62,907,895** | — | | Total liabilities | **$69,155,661** | **$4,963,608** | | Total stockholders' equity | **$36,168,829** | **$52,662,601** | | Total liabilities and stockholders' equity | **$105,324,490** | **$57,626,209** | - **Total assets** increased significantly from **$57.6 million** at December 31, 2020, to **$105.3 million** at June 30, 2021, primarily driven by a substantial increase in **cash and cash equivalents**[13](index=13&type=chunk) - A new **liability of $62.9 million related to the sale of future royalties** was recorded as of June 30, 2021, contributing to a large increase in **total liabilities**[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202021%20and%202020) Details the company's revenues, expenses, and net income/loss for the three and six months ended June 30, 2021 and 2020 | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change (YoY) | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (YoY) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Collaborative Revenue | **$0** | **$41,175,600** | **-$41,175,600** | **$0** | **$41,175,600** | **-$41,175,600** | | Research and development expenses | **$5,520,928** | **$5,766,984** | **-$246,056** | **$8,779,635** | **$13,849,494** | **-$5,069,859** | | General and administrative expenses | **$3,442,365** | **$5,900,518** | **-$2,458,153** | **$7,691,179** | **$10,089,586** | **-$2,398,407** | | Total expenses | **$8,963,293** | **$11,667,502** | **-$2,704,209** | **$16,470,814** | **$23,939,080** | **-$7,468,266** | | Net (loss) income | **$(10,589,163)** | **$29,529,376** | **-$40,118,539** | **$(19,393,896)** | **$17,378,211** | **-$36,772,107** | | Net (loss) income per share, basic | **$(0.25)** | **$0.75** | **-$1.00** | **$(0.45)** | **$0.44** | **-$0.89** | - The company reported a **net loss** for both the three and six months ended **June 30, 2021**, compared to **net income** in the prior year periods, primarily due to the absence of **collaborative revenue** recognized in **2020** and the new **non-cash interest expense** from the **sale of future royalties**[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20six%20months%20ended%20June%2030%2C%202021%20and%202020) Outlines changes in stockholders' equity for the six months ended June 30, 2021 and 2020, including net loss and stock-based compensation | Metric | January 1, 2021 | June 30, 2021 | | :-------------------------- | :-------------- | :-------------- | | Common Stock (Amount) | **$4,272** | **$4,272** | | Additional Paid-In Capital | **$337,453,776** | **$340,353,900** | | Accumulated Deficit | **$(284,795,447)** | **$(304,189,343)** | | Total Stockholders' Equity | **$52,662,601** | **$36,168,829** | - **Total stockholders' equity** decreased from **$52.7 million** at **January 1, 2021**, to **$36.2 million** at **June 30, 2021**, primarily due to the **net loss** incurred during the period, partially offset by **stock-based compensation**[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202021%20and%202020) Summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | **$(11.1) million** | **$(16.8) million** | | Net cash provided by investing activities | **$0** | **$21.5 million** | | Net cash provided by financing activities | **$60.0 million** | **$6.1 million** | | Net increase in cash | **$48.9 million** | **$10.8 million** | | Cash, cash equivalents and restricted cash - End of period | **$74,314,767** | **$32,352,075** | - **Net cash provided by financing activities** significantly increased in **2021** due to the **$60 million upfront payment** from the **sale of future seltorexant royalties**[21](index=21&type=chunk) - The company's **cash, cash equivalents, and restricted cash** increased substantially to **$74.3 million** at **June 30, 2021**, from **$32.4 million** at **June 30, 2020**, primarily driven by the royalty sale proceeds[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [NOTE 1 — Nature of Operations and Liquidity](index=8&type=section&id=NOTE%201%20%E2%80%94%20NATURE%20OF%20OPERATIONS%20AND%20LIQUIDITY) Describes the company's biopharmaceutical focus, accumulated deficit, liquidity position, and future capital needs - **Minerva Neurosciences** is a **clinical-stage biopharmaceutical company** developing **roluperidone** for **schizophrenia** and **MIN-301** for **Parkinson's disease**[23](index=23&type=chunk) - The company has an **accumulated deficit of approximately $304.2 million** as of **June 30, 2021**, and incurred **$11.1 million** in **net cash used in operating activities** for the six months ended **June 30, 2021**[25](index=25&type=chunk) - As of **June 30, 2021**, the company had **$74.3 million** in **cash, cash equivalents, and restricted cash**, which is expected to be sufficient for at least the next **12 months**[26](index=26&type=chunk) - The company will need to raise **additional capital** for later-stage clinical development programs, with **no assurance of obtaining financing on acceptable terms**[27](index=27&type=chunk) - A **securities class action lawsuit** filed against the company and its CEO regarding **roluperidone development** was **voluntarily dismissed** by the lead plaintiff on **July 9, 2021**[29](index=29&type=chunk) - The ongoing **COVID-19 pandemic** could adversely affect the company's business, productivity, clinical programs, and financial condition, though it has not had a material adverse impact to date[30](index=30&type=chunk)[31](index=31&type=chunk) [NOTE 2 — Significant Accounting Policies](index=9&type=section&id=NOTE%202%20%E2%80%94%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines key accounting principles, including revenue recognition, R&D costs, and the treatment of royalty sales - The interim condensed consolidated financial statements are prepared in accordance with **GAAP** for interim reporting and **SEC Regulation S-X, Rule 8-03**[32](index=32&type=chunk) - **Research and development costs** are expensed as incurred, including licensing fees, consultant fees, and clinical study expenses[41](index=41&type=chunk) - **In-process research and development (IPR&D)** assets are capitalized at fair value and accounted for as indefinite-lived intangible assets, subject to annual impairment testing[43](index=43&type=chunk)[44](index=44&type=chunk) - **Stock-based compensation** is recognized using a fair-value measurement method, with the **Black-Scholes model** for options and closing price for **RSUs**[45](index=45&type=chunk) - The **sale of future royalties** to **Royalty Pharma** is treated as **debt financing** due to the company's continuing involvement and **Royalty Pharma's** recourse, with the **upfront payment** recorded as a **liability** and amortized to **interest expense**[63](index=63&type=chunk) - The company adopted **ASU 2018-18 (Collaborative Arrangements)** and **ASU 2017-04 (Goodwill Impairment)** on **January 1, 2020**[69](index=69&type=chunk)[70](index=70&type=chunk) [NOTE 3 — Accrued Expenses and Other Liabilities](index=14&type=section&id=NOTE%203%20%E2%80%94%20ACCURRED%20EXPENSES%20AND%20OTHER%20LIABILITIES) Details the breakdown and changes in accrued expenses and other liabilities between periods | Accrued Expense Category | June 30, 2021 | December 31, 2020 | | :--------------------------------------- | :-------------- | :------------------ | | Research and development costs and other accrued expenses | **$1,631,882** | **$1,880,552** | | Accrued bonus | **$766,522** | — | | Professional fees | **$349,922** | **$140,981** | | Vacation pay | **$86,099** | — | | Accrued severance | — | **$31,876** | | Total | **$2,834,425** | **$2,053,409** | - **Total accrued expenses and other liabilities** increased from **$2.05 million** at December 31, 2020, to **$2.83 million** at June 30, 2021, primarily due to **accrued bonuses** and **professional fees**[71](index=71&type=chunk) [NOTE 4 — Net (Loss) Income Per Share of Common Stock](index=15&type=section&id=NOTE%204%20%E2%80%94%20NET%20(LOSS)%20INCOME%20PER%20SHARE%20OF%20COMMON%20STOCK) Explains the calculation of basic and diluted net (loss) income per share and excluded antidilutive securities | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income | **$(10,589,163)** | **$29,529,376** | **$(19,393,896)** | **$17,378,211** | | Weighted average shares outstanding - basic | **42,721,566** | **39,483,187** | **42,721,566** | **39,330,389** | | Dilutive effect | — | **794,884** | — | **814,607** | | Weighted average shares outstanding - diluted | **42,721,566** | **40,278,071** | **42,721,566** | **40,144,996** | | Net (loss) income per share: Basic | **$(0.25)** | **$0.75** | **$(0.45)** | **$0.44** | | Net (loss) income per share: Diluted | **$(0.25)** | **$0.73** | **$(0.45)** | **$0.43** | - For the periods ended **June 30, 2021**, **common stock options, restricted stock units, and common stock warrants** were excluded from diluted EPS calculation as their effect was **antidilutive** due to the **net loss**[72](index=72&type=chunk) [NOTE 5 — Co-Development and License Agreement](index=15&type=section&id=NOTE%205%20%E2%80%94%20CO-DEVELOPMENT%20AND%20LICENSE%20AGREEMENT) Details Minerva's opt-out from the Janssen seltorexant agreement and subsequent royalty entitlement - **Minerva** exercised its right to opt out of the **co-development agreement** with **Janssen** for **seltorexant** in **June 2020**[76](index=76&type=chunk) - Upon opting out, **Minerva** became entitled to **mid-single digit royalties** on potential future worldwide sales of **seltorexant**, with no further financial obligations to **Janssen**[76](index=76&type=chunk) - The company recognized **$41.2 million** in **collaborative revenue** during the **second quarter of 2020**, representing a **$30 million** payment from **Janssen** and **$11.2 million** in forgiven accrued expenses[77](index=77&type=chunk) [NOTE 6 — Sale of Future Royalties](index=16&type=section&id=NOTE%206%20%E2%80%94%20SALE%20OF%20FUTURE%20ROYALTIES) Describes the sale of seltorexant royalties to Royalty Pharma, treated as debt financing, and related interest expense - On **January 19, 2021**, **Minerva** sold its **seltorexant royalty interest** to **Royalty Pharma** for an **upfront payment of $60 million** and up to **$95 million** in contingent milestone payments[79](index=79&type=chunk) - The transaction is treated as **debt financing**, with the **$60 million upfront payment** recorded as a **liability related to the sale of future royalties**[79](index=79&type=chunk) - The **liability** is amortized to **interest expense** using the **effective interest method**, with an estimated **effective annual interest rate of approximately 10.5%**[80](index=80&type=chunk) | Metric | June 30, 2021 | | :------------------------------------------ | :-------------- | | Upfront payment from the sale of future royalties | **$60,000,000** | | Non-cash interest expense associated with the sale of future royalties | **$2,907,895** | | Liability related to the sale of future royalties | **$62,907,895** | [NOTE 7 — Stockholders' Equity](index=16&type=section&id=NOTE%207%20%E2%80%94%20STOCKHOLDERS'%20EQUITY) Provides information on the At-the-Market Equity Offering Program and outstanding term loan warrants - Under the **At-the-Market Equity Offering Program**, the company sold **3,381,608 shares** of common stock in **2020**, generating approximately **$12.1 million** in **net proceeds**[82](index=82&type=chunk) - **Warrants to purchase 40,790 shares** of common stock, issued in **2016**, remained **outstanding and exercisable** as of **June 30, 2021**[83](index=83&type=chunk) [NOTE 8 — Stock Award Plan and Stock-Based Compensation](index=17&type=section&id=NOTE%208%20%E2%80%94%20STOCK%20AWARD%20PLAN%20AND%20STOCK-BASED%20COMPENSATION) Details stock option activity, unrecognized compensation costs, and stock-based compensation expense | Stock Option Activity | Shares Issuable | Weighted Average Exercise Price | | :-------------------------- | :-------------- | :------------------------------ | | Outstanding January 1, 2021 | **10,050,523** | **$6.60** | | Granted | **140,000** | **$2.90** | | Forfeited | **(465,775)** | **$6.53** | | Outstanding June 30, 2021 | **9,724,748** | **$6.55** | | Exercisable June 30, 2021 | **6,943,670** | **$6.80** | | Available for future grant | **483,391** | | - **Total unrecognized compensation costs** related to **non-vested stock options** at **June 30, 2021**, were approximately **$7.6 million**, to be recognized over a **weighted-average period of 1.64 years**[84](index=84&type=chunk) | Stock-Based Compensation Expense | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | **$641,373** | **$694,540** | **$1,285,549** | **$1,376,153** | | General and administrative | **$742,687** | **$2,790,942** | **$1,614,575** | **$4,307,516** | | Total | **$1,384,060** | **$3,485,482** | **$2,900,124** | **$5,683,669** | [NOTE 9 — Commitments and Contingencies](index=18&type=section&id=NOTE%209%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) Refers to other notes for details on legal proceedings and lease commitments - **Legal proceedings** are discussed in **Note 1**[88](index=88&type=chunk) - **Lease commitments** are discussed in **Note 10**[89](index=89&type=chunk) [NOTE 10 — Leases](index=18&type=section&id=NOTE%2010%20%E2%80%94%20LEASES) Outlines the company's office sublease, new license agreement, and associated lease costs - The company's office sublease for its Waltham, MA office space expires on **July 31, 2021**[90](index=90&type=chunk) - A new **12-month** office license agreement, starting **August 1, 2021**, for the same office space, will not be recognized on the balance sheet due to its short term[91](index=91&type=chunk) | Lease Information | Six Months Ended June 30, 2021 | | :-------------------------------- | :--------------------------- | | Operating Sublease cost | **$89,635** | | Operating cash flows used for operating Sublease | **$97,730** | | Weighted average remaining Sublease term | **0.1 years** | | Weighted average discount rate | **10%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operations, liquidity, and critical accounting policies [Overview](index=20&type=section&id=Overview) Introduces Minerva's clinical-stage focus, product candidates, seltorexant royalty sale, and future financial outlook - **Minerva Neurosciences** is a **clinical-stage biopharmaceutical company** focused on developing product candidates for central nervous system (CNS) diseases[95](index=95&type=chunk) - The company is developing **roluperidone** for negative symptoms in **schizophrenia** and **MIN-301** for **Parkinson's disease**[96](index=96&type=chunk) - In **January 2021**, **Minerva** sold its rights to potential **seltorexant royalties** to **Royalty Pharma**[96](index=96&type=chunk) - The company plans to continue communication with the **FDA** regarding **roluperidone** data and aims for an **NDA submission** in the **first half of 2022**[97](index=97&type=chunk) - **Minerva** has not generated revenue from **product sales** and expects to incur **net losses** and negative cash flow for the foreseeable future[98](index=98&type=chunk) [Clinical and Regulatory Update](index=20&type=section&id=Clinical%20and%20Regulatory%20Update) Provides updates on the clinical development and regulatory status of roluperidone and seltorexant [Roluperidone](index=20&type=section&id=Roluperidone) Summarizes Phase 3 trial results for roluperidone, including OLE data, prior trial outcomes, and bioequivalence study progress - The **40-week open-label extension (OLE)** of the **Phase 3 trial** for **roluperidone** showed mean improvements in negative symptoms (**6.8 points** for **32 mg**, **7.5 points** for **64 mg**) and functional improvement (**PSP total score**: **12.3 points** for **32 mg**, **14.5 points** for **64 mg**)[100](index=100&type=chunk) - **Roluperidone** was safe and well-tolerated in the **OLE**, with headaches (**7.8%**) and worsening schizophrenia (**5.4%**) as the most frequently reported **treatment-emergent adverse events**[103](index=103&type=chunk) - The **12-week double-blind, placebo-controlled portion** of the **Phase 3 trial** did not meet its primary or key secondary endpoints in the **intent-to-treat population**[104](index=104&type=chunk) - A subsequent analysis of the **modified ITT population** treated with the **64 mg** dose showed nominally statistically significant results for NSFS (**p ≤0.044**) and **PSP total score** (**p ≤0.017**)[104](index=104&type=chunk) - Enrollment for a pivotal **bioequivalence study** comparing **roluperidone** formulations was completed on **June 29, 2021**, with top-line results anticipated in **Q3 2021**[105](index=105&type=chunk) [Seltorexant](index=21&type=section&id=Seltorexant) Details Minerva's opt-out from the Janssen agreement and the subsequent sale of seltorexant royalty rights - **Minerva** opted out of the **seltorexant development agreement** with **Janssen** in **June 2020**, securing **mid-single digit royalties** on future worldwide sales[106](index=106&type=chunk) - The company sold its **seltorexant royalty rights** to **Royalty Pharma** in **January 2021** for a **$60 million upfront payment** and up to **$95 million** in additional milestone payments[106](index=106&type=chunk) [Financial Overview](index=21&type=section&id=Financial%20Overview) Explains the company's revenue sources, R&D and G&A expenses, foreign exchange, and non-cash interest expense - The company has not generated revenue from **product sales** and recognized **$41.2 million** in **collaborative revenue** in **2020** due to opting out of the **Janssen agreement**[107](index=107&type=chunk)[108](index=108&type=chunk) - **Research and development expenses** include costs for clinical trials, licensing fees, materials, regulatory compliance, and personnel[109](index=109&type=chunk) - **General and administrative expenses** cover executive, finance, legal, auditing, and tax functions, including salaries, facility costs, and professional fees[112](index=112&type=chunk) - **Foreign exchange losses** primarily arise from clinical trial expenses denominated in **Euros**[114](index=114&type=chunk) - **Non-cash interest expense** for the **sale of future royalties** is associated with the **Royalty Pharma agreement**[115](index=115&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Compares financial performance for the three and six months ended June 30, 2021, versus 2020 [Comparison of Three Months Ended June 30, 2021 versus June 30, 2020](index=22&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030%2C%202021%20versus%20June%2030%2C%202020) Compares collaborative revenue, expenses, and other financial metrics for the three months ended June 30, 2021 and 2020 | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Collaborative Revenue | **$0** | **$41,175,600** | **-$41,175,600** | | Research and Development Expenses | **$5,520,928** | **$5,766,984** | **-$246,056** | | General and Administrative Expenses | **$3,442,365** | **$5,900,518** | **-$2,458,153** | | Foreign Exchange Losses | **$18,997** | **$3,661** | **+$15,336** | | Investment Income | **$4,566** | **$24,939** | **-$20,373** | | Non-cash interest expense for sale of future royalties | **$1,611,439** | **$0** | **+$1,611,439** | - The decrease in **R&D expenses** was primarily due to the completion of the three-month core study portion of the **roluperidone Phase 3 clinical trial** in **May 2020**[117](index=117&type=chunk) - The decrease in **G&A expenses** was mainly driven by lower **non-cash stock-based compensation** and **severance benefits**[118](index=118&type=chunk) [Comparison of Six Months Ended June 30, 2021 versus June 30, 2020](index=23&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030%2C%202021%20versus%20June%2030%2C%202020) Compares collaborative revenue, expenses, and other financial metrics for the six months ended June 30, 2021 and 2020 | Metric | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Collaborative Revenue | **$0** | **$41,175,600** | **-$41,175,600** | | Research and Development Expenses | **$8,779,635** | **$13,849,494** | **-$5,069,859** | | General and Administrative Expenses | **$7,691,179** | **$10,089,586** | **-$2,398,407** | | Foreign Exchange Losses | **$23,853** | **$13,053** | **+$10,800** | | Investment Income | **$8,666** | **$154,744** | **-$146,078** | | Non-cash interest expense for sale of future royalties | **$2,907,895** | **$0** | **+$2,907,895** | - The decrease in **R&D expenses** was primarily due to lower costs for the **Phase 3 clinical trial** of **roluperidone** following the completion of its core study portion in **May 2020**[123](index=123&type=chunk) - The decrease in **G&A expenses** was mainly due to a reduction in **non-cash stock-based compensation expenses** and **severance benefits**[124](index=124&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash position, accumulated deficit, future capital needs, and funding strategies [Sources of Liquidity](index=23&type=section&id=Sources%20of%20Liquidity) Details the company's cash reserves and accumulated deficit, assessing sufficiency for future operations - As of **June 30, 2021**, the company had an **accumulated deficit of approximately $304.2 million**[128](index=128&type=chunk) - The company held approximately **$74.3 million** in **cash, cash equivalents, and restricted cash** as of **June 30, 2021**, which is believed to be sufficient for at least the next **12 months**[128](index=128&type=chunk)[129](index=129&type=chunk) - Future expenditures will depend on clinical trial design, R&D progress, commercial infrastructure, and product launch costs, necessitating **additional capital**[130](index=130&type=chunk) [Sources of Funds](index=24&type=section&id=Sources%20of%20Funds) Outlines funding mechanisms, including the ATM program and the seltorexant royalty sale proceeds - Under its **ATM Equity Offering Program**, the company sold **3,381,608 shares** of common stock in **2020**, generating approximately **$12.1 million** in **net proceeds**[131](index=131&type=chunk) - In **January 2021**, **Minerva** received a **$60 million upfront payment** from **Royalty Pharma** for the **sale of its seltorexant royalty interest**, with potential for up to **$95 million** in future milestone payments[133](index=133&type=chunk) [Uses of Funds](index=24&type=section&id=Uses%20of%20Funds) Explains expected increases in expenses and the need for future financing, acknowledging market uncertainties - The company has not generated revenue from **product sales** and expects expenses to increase with ongoing development, clinical trials, and regulatory approval processes[134](index=134&type=chunk) - Future cash needs are expected to be financed through **equity offerings, debt financings, and collaborations**, which may result in **stockholder dilution or restrictive covenants**[135](index=135&type=chunk) - The **uncertainty and volatility in capital markets**, exacerbated by the **COVID-19 pandemic**, may negatively impact the availability and cost of capital[135](index=135&type=chunk) [Cash Flows](index=25&type=section&id=Cash%20Flows) Summarizes cash flow activities from operations, investing, and financing for the six months ended June 30, 2021 and 2020 | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash (used in) provided by: Operating activities | **$(11.1) million** | **$(16.8) million** | | Net cash (used in) provided by: Investing activities | **$0** | **$21.5 million** | | Net cash (used in) provided by: Financing activities | **$60.0 million** | **$6.1 million** | | Net increase in cash | **$48.9 million** | **$10.8 million** | - **Net cash used in operating activities** for the six months ended **June 30, 2021**, was **$11.1 million**, primarily due to a **net loss of $19.4 million**, partially offset by **stock-based compensation** and **non-cash interest expense**[139](index=139&type=chunk) - **Net cash provided by financing activities** for the six months ended **June 30, 2021**, was **$60 million**, entirely from the **proceeds of the sale of future royalties**[142](index=142&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Identifies key accounting policies and estimates, including R&D, IPR&D, goodwill, and royalty sale liability - The most critical accounting policies and estimates for the six months ended **June 30, 2021**, include **research and development costs, in-process research and development, goodwill, income taxes, and the liability related to the sale of future royalties**[144](index=144&type=chunk)[145](index=145&type=chunk) - The **sale of future royalties** to **Royalty Pharma** is treated as **debt financing**, with the **upfront payment** recorded as a **liability** and amortized to **interest expense** using the **effective interest rate method**[146](index=146&type=chunk) - Estimates of future royalty payments are periodically assessed, and material differences from previous estimates will result in **prospective adjustments to non-cash interest expense**[147](index=147&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 2 for details on recently adopted accounting pronouncements - The company's significant accounting policies, including recently adopted pronouncements, are described in **Note 2** to the condensed consolidated financial statements[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) States that no market risk disclosures are applicable for the reported period - This item is **not applicable** to the company[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures and absence of material internal control changes - The company's **disclosure controls and procedures** were evaluated as effective at a reasonable assurance level as of **June 30, 2021**[152](index=152&type=chunk) - There were **no material changes in internal control over financial reporting** during the latest fiscal quarter[153](index=153&type=chunk) PART II — Other Information Presents other required disclosures including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) Details the consolidation and voluntary dismissal of securities class action lawsuits against the company - Two **securities class action complaints** were filed against the company and its executives regarding alleged false statements about **roluperidone development**[155](index=155&type=chunk) - The lawsuits were **consolidated**, and the appointed lead plaintiff **voluntarily dismissed** the case on **July 9, 2021**, resulting in the **closure of the lawsuit**[155](index=155&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) Updates on significant risks including accumulated losses, capital needs, and COVID-19 impacts - The company has incurred **significant losses since inception**, with an **accumulated deficit of $304.2 million** as of **June 30, 2021**, and expects to continue incurring losses[157](index=157&type=chunk)[158](index=158&type=chunk) - **Additional capital will be required** to finance operations and product development, and there is **no guarantee that such funding will be available on acceptable terms**, potentially leading to **dilution or scaling back operations**[159](index=159&type=chunk)[160](index=160&type=chunk) - The ongoing **COVID-19 pandemic** poses risks including **negative impacts on productivity, delays in clinical programs, difficulties in patient enrollment, and adverse effects on capital markets and the company's financial condition**[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no unregistered equity sales or repurchases during the reported period - **No unregistered securities were sold** during the six months ended **June 30, 2021**[165](index=165&type=chunk) - **No securities were repurchased** during the six months ended **June 30, 2021**[166](index=166&type=chunk) [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that no defaults upon senior securities are applicable for the reported period - This item is **not applicable** to the company[167](index=167&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that no mine safety disclosures are applicable for the reported period - This item is **not applicable** to the company[168](index=168&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) States that no other information is applicable for the reported period - This item is **not applicable** to the company[169](index=169&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the report, including corporate documents and certifications - The exhibits include the **Amended and Restated Certificate of Incorporation**, **Amended and Restated Bylaws**, **CEO and CFO certifications (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act)**, and **Inline XBRL documents**[172](index=172&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) Contains the official signature certifying the filing of the report - The report is signed by **Geoffrey Race, Chief Financial Officer and Chief Business Officer** of **Minerva Neurosciences, Inc.**, on **August 2, 2021**[177](index=177&type=chunk)