Minerva Neurosciences, Inc. (NASDAQ:NERV) Q4 2019 Earnings Conference Call March 9, 2020 8:30 AM ET Company Participants William Boni - Vice President of 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 Jason Butler - JMP Securities Douglas Tsao - H.C. Wainwright Shawn Egan - Citi Biren Amin - Jefferies Myles Minter - William Blair ...

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, 2019 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 ...

Financial Data and Key Metrics Changes - As of September 30, 2019, the company reported cash, cash equivalents, restricted cash, and marketable securities of approximately $60 million, which is expected to meet cash commitments for at least the next 12 months [26] - Research and development expenses for Q3 2019 were $9.7 million, compared to $8.4 million in Q3 2018, while for the nine months ended September 30, 2019, expenses were $29.6 million compared to $25.9 million for the same period in 2018 [26] - General and administrative expenses for Q3 2019 were $4.6 million, up from $4.1 million in Q3 2018, and for the nine months ended September 30, 2019, they were $13.9 million compared to $12.2 million in the same period in 2018 [27] - The company reported a net loss of $14 million for Q3 2019, compared to a net loss of $12 million in Q3 2018, and for the nine months ended September 30, 2019, the net loss was $42.3 million compared to $37 million for the same period in 2018 [28] Business Line Data and Key Metrics Changes - The company has completed and read out top-line results from four trials with seltorexant in major depressive disorder (MDD) and insomnia [9] - Enrollment in the Phase 2b trial with MIN-117 in MDD has been concluded, with top-line results expected in Q4 2019 [9][18] - Patient enrollment in the pivotal Phase III trial with roluperidone has resumed, with expectations to complete enrollment of 501 patients by year-end [10][11] Market Data and Key Metrics Changes - Seltorexant has shown meaningful and consistent improvement in mood and sleep symptoms across trials, with the 20 mg dose demonstrating the most robust effects [20][21] - The company is currently discussing next steps in the seltorexant program with Janssen, indicating ongoing collaboration in the market [23] Company Strategy and Development Direction - The company aims to maintain the quality of patient screening and selection in clinical trials, prioritizing integrity over speed in recruitment [11] - There is a focus on advancing roluperidone, seltorexant, and MIN-117 through clinical testing, with an emphasis on differentiating these products from currently approved treatments [23] - The company is preparing for the filing of a new drug application for roluperidone, with a commercial supply agreement already in place [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of their clinical-stage products to address significant unmet medical needs, particularly in treating negative symptoms of schizophrenia [14][23] - The company is optimistic about the upcoming results from clinical trials and the potential for regulatory pathways for their product candidates [65] Other Important Information - The company has completed drug-drug interaction studies for roluperidone, showing minimal interaction with cytochrome P450 enzymes, which is favorable for its use as a monotherapy or in combination [33] - A new patent application related to MIN-117 for neuropathic pain has been filed, indicating exploration of additional therapeutic areas [34] Q&A Session Summary Question: Clarification on site expansion for roluperidone Phase III - Management clarified that they are not adding new sites to counter recruitment delays, emphasizing the importance of maintaining study integrity [31] Question: Results from drug-drug interaction studies for roluperidone - Management confirmed that the studies showed minimal interaction with key cytochrome enzymes, supporting the drug's use in various treatment settings [33] Question: Timeline for seltorexant and Janssen collaboration - Management indicated that they are working closely with Janssen to finalize plans based on feedback from an upcoming end of Phase II meeting with the FDA [39] Question: Safety data requirements for roluperidone filing - Management stated that they can start filing based on the 12-week double-blind phase results, with the 12-month safety data potentially added in a rolling basis [40] Question: Proportion of US to EU patients in roluperidone trials - Management confirmed that they aim for approximately 30% of patients from the US, but this is not mandatory, and they are monitoring safety and efficacy across regions [55] Question: Powering assumptions for MIN-117 trial - Management confirmed a clinically meaningful threshold of a 2.5 point difference over placebo for the MADRS scale, with good recruitment in the US [56] Question: Interest in advancing MIN-117 into Phase III - Management indicated that they will evaluate options based on the results of the ongoing trials before making decisions on partnerships or independent advancement [60]

[PART I — Financial Information](index=4&type=section&id=PART%20I%20%E2%80%94%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended September 30, 2019, show a decrease in total assets to $110.8 million from $139.1 million at year-end 2018, primarily due to a reduction in cash and marketable securities, with a net loss of $42.3 million for the nine months [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2019, total assets decreased to $110.8 million from $139.1 million, mainly due to a reduction in cash and marketable securities, while total liabilities increased to $55.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $37,906 | $50,235 | | Marketable securities | $22,027 | $37,762 | | Total current assets | $61,409 | $90,018 | | Total assets | $110,813 | $139,136 | | **Liabilities & Equity** | | | | Total current liabilities | $9,896 | $3,609 | | Total liabilities | $55,286 | $48,871 | | Accumulated deficit | ($256,818) | ($214,553) | | Total stockholders' equity | $55,527 | $90,265 | | Total liabilities and stockholders' equity | $110,813 | $139,136 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported increased operating expenses and a wider net loss for both the three and nine months ended September 30, 2019, compared to the same periods in 2018, with net loss per share increasing to $1.08 for the nine months Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $9,674 | $8,369 | $29,600 | $25,881 | | General and administrative | $4,607 | $4,055 | $13,897 | $12,221 | | Loss from operations | ($14,282) | ($12,424) | ($43,498) | ($38,102) | | Net loss | ($13,962) | ($12,021) | ($42,266) | ($36,968) | | Net loss per share | ($0.36) | ($0.31) | ($1.08) | ($0.95) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2019, net cash used in operating activities was $29.3 million, offset by $16.4 million provided by investing activities, resulting in a net decrease in cash of $12.3 million Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($29,251) | ($32,142) | | Net cash provided by investing activities | $16,397 | $96,917 | | Net cash provided by (used in) financing activities | $525 | ($3,510) | | **Net (decrease) increase in cash** | **($12,329)** | **$61,265** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's operations as a clinical-stage biopharmaceutical firm focused on CNS diseases, its liquidity position of $60.0 million, and significant accounting policies including the Janssen co-development agreement and stock-based compensation - The company is a clinical-stage biopharmaceutical company focused on developing treatments for central nervous system (CNS) diseases, with key product candidates including roluperidone, seltorexant, MIN-117, and MIN-301[22](index=22&type=chunk) - As of September 30, 2019, the company had cash, cash equivalents, and marketable securities of **$60.0 million**, which management believes is sufficient to fund operations for at least the next 12 months, though additional capital will be required for later-stage clinical programs[25](index=25&type=chunk)[26](index=26&type=chunk) - An amendment to the co-development agreement with Janssen resulted in an upfront payment of **$30 million** and forgiveness of **$11.2 million** in collaborative expenses, recorded as deferred revenue[76](index=76&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Research and development | $652 | $2,006 | | General and administrative | $1,569 | $4,997 | | **Total** | **$2,221** | **$7,003** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's focus on developing CNS disease treatments, provides updates on clinical programs including delays for roluperidone and positive results for seltorexant, and notes increased R&D and G&A expenses, ending the quarter with $60.0 million in cash [Clinical Updates](index=21&type=section&id=Clinical%20Updates) The company provided significant updates across its product pipeline, including a cyber-attack delaying roluperidone Phase 3 results to H1 2020, completed enrollment for MIN-117 Phase 2b with Q4 2019 results expected, and positive Phase 2b results for seltorexant in MDD and insomnia - A cyber-attack on an external contractor disrupted patient recruitment for the roluperidone Phase 3 trial, delaying expected top-line results from the 12-week portion to the first half of 2020[102](index=102&type=chunk) - Enrollment was completed in the MIN-117 Phase 2b trial for Major Depressive Disorder (MDD), with top-line results expected in the fourth quarter of 2019[115](index=115&type=chunk) - Seltorexant (MIN-202) showed positive top-line results in a Phase 2b trial for MDD, with the **20 mg dose demonstrating a statistically significant improvement in MADRS score** compared to placebo[119](index=119&type=chunk) - In a Phase 2b trial for insomnia, seltorexant demonstrated highly statistically significant (p ≤ 0.001) improvement in Latency to Persistent Sleep (LPS), the primary endpoint[131](index=131&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Comparing the three and nine months ended September 30, 2019, to the same periods in 2018, the company saw an increase in operating expenses, driven by higher R&D costs for clinical trials and increased G&A expenses from professional fees and stock-based compensation Comparison of Operating Expenses (in millions) | Expense Category | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $9.7 | $8.4 | $29.6 | $25.9 | | General & Administrative | $4.6 | $4.1 | $13.9 | $12.2 | - The increase in R&D expenses was primarily driven by higher development costs for the Phase 3 trial of roluperidone and the Phase 2b trial of MIN-117[144](index=144&type=chunk)[149](index=149&type=chunk) - The increase in G&A expenses was mainly due to higher professional fees for pre-commercial activities and increased non-cash stock-based compensation[145](index=145&type=chunk)[150](index=150&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2019, the company had approximately $60.0 million in cash and equivalents, deemed sufficient for the next 12 months, but acknowledges the need for additional capital to fund future operations and later-stage clinical trials given its history of net losses and an accumulated deficit of $256.8 million - The company had approximately **$60.0 million** in cash, cash equivalents, marketable securities, and restricted cash as of September 30, 2019[154](index=154&type=chunk) - Management asserts that existing cash is sufficient to fund operations for at least the next 12 months, but acknowledges the need to raise additional capital to complete the development and commercialization of its product candidates[154](index=154&type=chunk)[160](index=160&type=chunk) Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Operating activities | ($29.2) | ($32.1) | | Investing activities | $16.4 | $96.9 | | Financing activities | $0.5 | ($3.5) | | **Net (decrease) increase in cash** | **($12.3)** | **$61.3** | [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is not applicable for the reporting period - The company states that this section is not applicable[173](index=173&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[175](index=175&type=chunk) - No changes were made to the internal control over financial reporting during the third quarter of 2019 that have materially affected, or are reasonably likely to materially affect, these controls[176](index=176&type=chunk) [PART II — Other Information](index=31&type=section&id=PART%20II%20%E2%80%94%20Other%20Information) [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any legal proceedings that it believes would have a material adverse effect on its business - As of the filing date, the company is not involved in any material legal proceedings[178](index=178&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company highlights key risks, including its history of significant losses, which are expected to continue as it advances its clinical programs, the need for additional capital, and vulnerability to system failures and cyber-attacks - The company has a history of significant losses, with a net loss of **$42.3 million** for the nine months ended September 30, 2019, and an accumulated deficit of **$256.8 million**[181](index=181&type=chunk) - The company will require substantial additional capital to fund its operations and clinical development, and failure to secure this funding could force it to delay, scale back, or discontinue programs[183](index=183&type=chunk)[185](index=185&type=chunk) - The company's operations are vulnerable to system failures and cyber-attacks, as demonstrated by a recent incident at an external contractor that disrupted patient recruitment for the roluperidone Phase 3 trial[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended September 30, 2019, the company did not sell any unregistered securities or repurchase any of its equity securities - There were no unregistered sales of equity securities during the third quarter of 2019[187](index=187&type=chunk) - The company did not repurchase any of its equity securities during the third quarter of 2019[188](index=188&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) On November 1, 2019, the Board of Directors amended and restated the company's bylaws, establishing the Court of Chancery of the State of Delaware as the exclusive forum for certain legal actions - The company's bylaws were amended and restated effective November 1, 2019[191](index=191&type=chunk) - The updated bylaws designate the Court of Chancery of the State of Delaware as the exclusive forum for specific types of stockholder litigation[191](index=191&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Amended and Restated Bylaws, a Commercial Supply Agreement with Catalent, and certifications from the CEO and CFO - Key exhibits filed include the Amended and Restated Bylaws (Exhibit 3.2) and a Commercial Supply Agreement with Catalent Germany Schorndorf GmbH (Exhibit 10.1)[195](index=195&type=chunk)

Financial Data and Key Metrics Changes - As of June 30, 2019, cash, cash equivalents, restricted cash, and marketable securities were approximately $69.4 million, sufficient to meet cash commitments for at least the next 12 months [38] - Research and Development (R&D) expenses were $8.3 million in Q2 2019, down from $9.1 million in Q2 2018, reflecting decreased nonclinical and clinical pharmacology expenses [39] - General and Administrative (G&A) expenses increased to $4.6 million in Q2 2019 from $3.9 million in Q2 2018, primarily due to increased non-cash stock-based compensation and salary costs [40] - Net loss for Q2 2019 was $12.5 million, unchanged from Q2 2018, while the net loss for the first six months of 2019 was $28.3 million compared to $24.9 million for the same period in 2018 [42] Business Line Data and Key Metrics Changes - The company reported positive top-line results in two Phase 2b trials with seltorexant for major depressive disorder (MDD) and insomnia, indicating significant improvements in symptoms [10][11] - The Phase 3 trial with roluperidone is ongoing, focusing on patients with schizophrenia and negative symptoms, with approximately 500 patients expected to be enrolled [28] Market Data and Key Metrics Changes - The recent studies indicate that seltorexant shows efficacy in both adjunctive and monotherapy treatment of MDD, with significant improvements noted in patients with insomnia [20][26] - The insomnia study demonstrated statistically significant improvements in sleep latency in elderly patients, suggesting a favorable profile for seltorexant in this demographic [24][25] Company Strategy and Development Direction - The company aims to address unmet medical needs in neuropsychiatric disorders, with a focus on developing seltorexant and roluperidone as key therapeutic options [13][35] - Preparations for a New Drug Application (NDA) for roluperidone are underway, pending positive Phase 3 results, with a focus on ensuring adherence to trial parameters [32][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing clinical trials and the potential of seltorexant to treat multiple patient groups in MDD and insomnia [35] - The company is optimistic about the second half of 2019, anticipating important results from late-stage clinical trials [35][89] Other Important Information - The company is co-developing seltorexant with Janssen Pharmaceutica NV, which is noted as the only late-stage specific orexin-2 antagonist in development [14] - The safety and tolerability profile of seltorexant is comparable to that of placebo, indicating a favorable risk-benefit ratio [27] Q&A Session Summary Question: Impact of Phase 2 results on seltorexant program - Management indicated that the Phase 2 results will help fine-tune the development plan but will not change the basic strategy for Phase 3 studies [46][48] Question: Breakdown of patients in the Phase 3 roluperidone program - Management confirmed efforts to achieve approximately 30% of patients from the U.S., with current enrollment aligning well with this target [50] Question: Timeline for NDA filing if Phase 3 results are successful - Management stated that preparations for the NDA are on track, with a focus on obtaining 12 months of safety data post-Phase 3 results [54][55] Question: Key takeaways from the MDD1009 study for seltorexant - The study confirmed the drug's direct effect on mood and reassured management about the drug's innovative mechanism of action [60][62] Question: Treatment effect differences with the 20 mg dose before week-5 - Management noted that differentiation between placebo and treatment was observed after two weeks, consistent with previous studies [81] Question: Evaluation of both 20 mg and 40 mg doses in the ongoing trial - The ongoing trial is a flexible dose study allowing for both 20 mg and 40 mg doses to be evaluated [85]

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 June 30, 2019 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 Jurisdiction of In ...

Clinical Programs - Roluperidone (MIN-101) is in Phase 3 development for negative symptoms in schizophrenia, with top-line results expected in Q4 2019 [3, 6, 65] The Phase 3 study design replicates the successful Phase 2b trial [6] The study involves 501 patients randomized 1:1:1 to 32 mg and 64 mg doses of MIN-101 versus placebo [15] - Seltorexant (MIN-202) Phase 2b trial (aMDD2001) showed a statistically significant improvement in MADRS total score at the 20 mg dose compared to placebo (p=0083) [3, 36, 40] A key secondary outcome showed an even greater difference from placebo for the seltorexant 20 mg arm in patients with clinically significant insomnia (ISI ≥ 15) with LS mean difference versus placebo of 49 on the MADRS total score and a 2-sided p-value of 0050 [36] Two further Phase 2b trials with TLR are expected in the near future [44] - MIN-117 is in an ongoing Phase 2b study for major depressive disorder and anxiety, with top-line results anticipated in Q4 2019 [3, 65] The study involves 324 patients [62] Financial Status - The company had a cash balance of $793 million as of March 31, 2019, providing a cash runway to early 2021 [65] Market Opportunity - Negative symptoms are identified as the leading unmet need in schizophrenia by treating physicians [32] - MDD affects 173 million adults in the US (71% of the population over age 18 and over) [47]

Financial Data and Key Metrics Changes - Cash, cash equivalents, restricted cash, and marketable securities as of March 31, 2019, were approximately $79.3 million, sufficient to meet cash commitments for at least the next 12 months [29] - Research and development expenses increased to $11.6 million in Q1 2019 from $8.4 million in Q1 2018, primarily due to higher development expenses for clinical trials [30] - General and administrative expenses rose to $4.7 million in Q1 2019 from $4.3 million in Q1 2018, attributed to increased non-cash stock-based compensation and salary costs [31] - Net loss for Q1 2019 was $15.8 million, or a loss per share of $0.41, compared to a net loss of $12.4 million, or a loss per share of $0.32, in Q1 2018 [31] Business Line Data and Key Metrics Changes - The company has five late-stage clinical efficacy trials ongoing with three product candidates, including a Phase 3 trial for roluperidone and Phase 2b trials for MIN-117 and seltorexant [10][11] - Enrollment for the Phase 3 trial of roluperidone is expected to complete in the second half of 2019, with top-line results anticipated in Q4 2019 [13] - The Phase 2b trial for MIN-117 is expected to complete enrollment of approximately 324 patients in Q3 2019, with top-line results also expected in Q4 2019 [17] Market Data and Key Metrics Changes - Increased competition for recruitment of schizophrenia patients has been noted, impacting enrollment timelines [13][37] - The company is actively engaging in commercial preparation activities for roluperidone, including filing a trade name application and finalizing supply agreements [25][26] Company Strategy and Development Direction - The company aims to address unmet medical needs in psychiatric disorders, focusing on innovative treatments for schizophrenia and major depressive disorders [10][19] - Preparatory work for regulatory filing and commercialization of roluperidone is ongoing, including clinical pharmacology studies and manufacturing registration batches [15] - The company is committed to maintaining high standards in clinical trial conduct and patient selection to ensure the success of its trials [12][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing clinical trials and the potential of their product candidates to meet significant unmet needs in the market [10][19] - The company anticipates that the completion of its NDA preparation will not be impacted by recent enrollment delays, maintaining timelines for potential product launches in 2021 or 2022 [58][59] Other Important Information - The company has engaged a senior commercial leader and third-party vendor partners to finalize launch plans for roluperidone [26] - The company is conducting payor research to define the value proposition and access strategy for its products [26] Q&A Session Summary Question: Timeline delays for roluperidone Phase 3 screening failures - Management indicated that recent screening failures are random and reflect strict eligibility criteria, with no direct correlation to new site openings [35][36] Question: Decision-making process and timing with J&J regarding seltorexant trials - Management confirmed that data from the trials will be available in Q2 2019, with no clinical linked milestones affecting the decision-making process [43][44] Question: Secondary endpoints for seltorexant depression study - Management highlighted the importance of secondary endpoints related to insomnia complaints and the unique mechanism of action of the drug [50][52] Question: Changes in expenses over the year - Management noted that while trial costs are significant, they expect to keep expenses under control moving forward [55][57] Question: Impact of enrollment delays on roluperidone launch timing - Management reassured that the launch timeline remains unaffected, with preparations proceeding smoothly [58][59]

[PART I — Financial Information](index=4&type=section&id=PART%20I%20%E2%80%94%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Minerva Neurosciences, Inc. [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited):) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes. [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202019%20and%20December%2031%2C%202018) This table provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates. **Condensed Consolidated Balance Sheets (Selected Items, in millions):** | Item | March 31, 2019 | December 31, 2018 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $30.6 | $50.2 | | Marketable securities | $48.6 | $37.8 | | Total current assets | $80.3 | $90.0 | | Total assets | $129.8 | $139.1 | | Total current liabilities | $6.9 | $3.6 | | Total liabilities | $52.4 | $48.9 | | Total stockholders' equity | $77.4 | $90.3 | - Total current assets decreased from **$90.0 million** at December 31, 2018, to **$80.3 million** at March 31, 2019, primarily due to a decrease in cash and cash equivalents[13](index=13&type=chunk) - Total liabilities increased from **$48.9 million** at December 31, 2018, to **$52.4 million** at March 31, 2019, driven by increases in accounts payable and accrued expenses[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This table outlines the company's financial performance over specific periods, focusing on expenses and net loss. **Condensed Consolidated Statements of Operations (Selected Items, in millions, except per share data):** | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $11.6 | $8.4 | | General and administrative | $4.7 | $4.3 | | Total expenses | $16.3 | $12.7 | | Net loss | $(15.8) | $(12.4) | | Net loss per share, basic and diluted | $(0.41) | $(0.32) | | Weighted average shares outstanding | 38,968,110 | 38,749,343 | - Net loss increased to **$15.8 million** for the three months ended March 31, 2019, from **$12.4 million** in the prior year period, primarily due to higher research and development expenses[15](index=15&type=chunk) - Research and development expenses increased by approximately **$3.2 million** year-over-year, reflecting increased clinical trial activities[15](index=15&type=chunk) [Condensed Consolidated Statement of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This table details changes in the company's equity, including total equity, accumulated deficit, and additional paid-in capital. **Condensed Consolidated Statement of Stockholders' Equity (Selected Items, in millions, except share data):** | Item | March 31, 2019 | March 31, 2018 | | :-------------------------- | :------------- | :------------- | | Total Stockholders' Equity | $77.4 | $121.3 | | Accumulated Deficit | $(230.4) | $(176.8) | | Additional Paid-In Capital | $307.8 | $298.1 | | Common Stock Shares Outstanding | 39,025,471 | 38,749,343 | - Total stockholders' equity decreased from **$90.3 million** at January 1, 2019, to **$77.4 million** at March 31, 2019, primarily due to the net loss incurred during the period[18](index=18&type=chunk) - Accumulated deficit increased by **$15.8 million** to **$230.4 million** as of March 31, 2019, reflecting the net loss for the quarter[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This table summarizes the cash inflows and outflows from operating, investing, and financing activities for the reported periods. **Condensed Consolidated Statements of Cash Flows (Selected Items, in millions):** | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(9.6) | $(10.9) | | Net cash (used in) provided by investing activities | $(10.5) | $31.3 | | Net cash provided (used in) by financing activities | $0.5 | $(1.3) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(19.6) | $19.1 | | Cash, cash equivalents and restricted cash, End of period | $30.7 | $45.2 | - Net cash used in operating activities decreased to **$9.6 million** in Q1 2019 from **$10.9 million** in Q1 2018, despite a higher net loss, due to favorable changes in operating assets and liabilities[21](index=21&type=chunk) - Investing activities shifted from providing **$31.3 million** in Q1 2018 to using **$10.5 million** in Q1 2019, primarily due to increased purchases of marketable securities[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section 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) Minerva Neurosciences, Inc. is a clinical-stage biopharmaceutical company focused on developing product candidates for central nervous system diseases. - Minerva Neurosciences is a clinical-stage biopharmaceutical company developing four proprietary compounds for CNS diseases: roluperidone (schizophrenia), seltorexant (insomnia/MDD), MIN-117 (MDD), and MIN-301 (Parkinson's disease)[22](index=22&type=chunk) - The company has an accumulated deficit of approximately **$230.4 million** as of March 31, 2019, and incurred **$9.6 million** in net cash used in operating activities for the three months ended March 31, 2019[24](index=24&type=chunk) - As of March 31, 2019, the company had **$79.3 million** in cash, cash equivalents, marketable securities, and restricted cash, which is believed to be sufficient for at least the next 12 months, but additional capital will be needed for later-stage clinical development[25](index=25&type=chunk)[26](index=26&type=chunk) [NOTE 2 — Significant Accounting Policies](index=9&type=section&id=NOTE%202%20%E2%80%94%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the significant accounting policies used in preparing the condensed consolidated financial statements, including revenue recognition and lease accounting. - The company adopted ASC Topic 842, Leases, effective January 1, 2019, using a modified retrospective approach, resulting in the recognition of operating lease liabilities and right-of-use assets of approximately **$0.4 million** each on the balance sheet[44](index=44&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - Research and development costs, including licensing fees and fees paid to consultants and CROs, are expensed as incurred[35](index=35&type=chunk) - The company has no commercially approved products and has not generated revenue from product sales to date, applying ASC 606 for revenue recognition, deferring unearned revenue[51](index=51&type=chunk)[53](index=53&type=chunk) [NOTE 3 — Accrued Expenses and Other Liabilities](index=14&type=section&id=NOTE%203%20%E2%80%94%20ACCRUED%20EXPENSES%20AND%20OTHER%20LIABILITIES) This note provides a breakdown of accrued expenses and other liabilities, showing a significant increase in research and development costs and accrued bonus. **Accrued Expenses and Other Liabilities (in millions):** | Item | March 31, 2019 | December 31, 2018 | | :-------------------------------- | :------------- | :---------------- | | Research and development costs and other accrued expenses | $2.6 | $1.4 | | Accrued bonus | $0.5 | — | | Professional fees | $0.4 | $0.5 | | Vacation pay | $0.3 | — | | **Total** | **$3.7** | **$1.8** | - Total accrued expenses and other current liabilities increased by over **$1.9 million** from December 31, 2018, to March 31, 2019, primarily due to increases in research and development costs and accrued bonus[65](index=65&type=chunk) [NOTE 4 — Net Loss Per Share of Common Stock](index=14&type=section&id=NOTE%204%20%E2%80%94%20NET%20LOSS%20PER%20SHARE%20OF%20COMMON%20STOCK) This note details the computation of basic and diluted net loss per share, indicating that diluted loss per share is the same as basic loss per share. **Net Loss Per Share of Common Stock (in millions, except per share and share data):** | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(15.8) | $(12.4) | | Weighted average shares outstanding | 38,968,110 | 38,749,343 | | Net loss per share – basic and diluted | $(0.41) | $(0.32) | - The net loss per share increased from **$(0.32)** in Q1 2018 to **$(0.41)** in Q1 2019[66](index=66&type=chunk) - Potentially dilutive securities, including common stock options, restricted stock units, and common stock warrants, were excluded from diluted EPS calculation as their effect was anti-dilutive due to the net loss[67](index=67&type=chunk) [NOTE 5 — Debt](index=15&type=section&id=NOTE%205%20%E2%80%94%20DEBT) This note describes the company's Loan and Security Agreement, with all Term A Loans fully repaid in August 2018, resulting in zero outstanding borrowings. - The company's Term A Loans, totaling **$10 million**, matured and were fully repaid on August 1, 2018[69](index=69&type=chunk)[70](index=70&type=chunk) - Interest expense decreased from **$0.1 million** in Q1 2018 to zero in Q1 2019 due to the repayment of the Term A loans[71](index=71&type=chunk) [NOTE 6 — Co-Development and License Agreement](index=15&type=section&id=NOTE%206%20%E2%80%94%20CO-DEVELOPMENT%20AND%20LICENSE%20AGREEMENT) This note details the co-development and license agreement with Janssen Pharmaceutica NV for seltorexant, including an amendment that provided a $30 million upfront payment. - Minerva has a co-development and license agreement with Janssen for seltorexant, granting Minerva exclusive commercialization rights in the Minerva Territory (EU, Switzerland, Liechtenstein, Iceland, Norway)[23](index=23&type=chunk)[72](index=72&type=chunk) - An August 2017 amendment resulted in a **$30 million** upfront payment from Janssen, waiver of **$11.2 million** in previously accrued collaborative expenses, and future milestone payments of up to **$40 million** for Phase 3 insomnia trials[75](index=75&type=chunk)[78](index=78&type=chunk) - Under the amendment, Minerva assumed strategic control of seltorexant's clinical development for insomnia and has no further financial obligations until after 'Decision Point 4'[76](index=76&type=chunk) [NOTE 7 — Stockholders' Equity](index=16&type=section&id=NOTE%207%20%E2%80%94%20STOCKHOLDERS'%20EQUITY) This note describes the warrants issued to lenders in connection with the Loan Agreement, allowing for the purchase of common stock. - In connection with the Loan Agreement, Minerva issued warrants to lenders to purchase **40,790 shares** of common stock at an exercise price of **$5.516** per share[80](index=80&type=chunk) - The fair value of these warrants was estimated at **$0.2 million** using a Black-Scholes model and was included as a discount to the Term A Loans and a component of additional paid-in capital[80](index=80&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) This note details the company's 2013 Equity Incentive Plan, including stock option and restricted stock unit (RSU) activity and related compensation expense. **Stock Option Activity (Q1 2019):** | Item | Shares Issuable Pursuant to Stock Options | Weighted Average Exercise Price | | :-------------------------- | :-------------------------------------- | :------------------------------ | | Outstanding January 1, 2019 | 8,498,047 | $6.99 | | Exercised | (87,500) | $6.00 | | Forfeited | (31,875) | $6.51 | | Outstanding March 31, 2019 | 8,378,672 | $7.00 | | Exercisable March 31, 2019 | 4,078,271 | $6.46 | **Stock-Based Compensation Expense (in millions):** | Category | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $0.7 | $0.5 | | General and administrative | $1.8 | $1.6 | | **Total** | **$2.5** | **$2.1** | - Total unrecognized compensation costs related to non-vested stock options at March 31, 2019, was approximately **$21.2 million**, expected to be recognized over a weighted-average period of 3.0 years[81](index=81&type=chunk) [NOTE 9 — Commitments and Contingencies](index=18&type=section&id=NOTE%209%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) The company is not currently aware of any legal proceedings or claims that would have a material adverse effect on its financial position or results of operations. - The company is not currently involved in any legal proceedings or claims that are expected to have a material adverse effect on its financial position or results of operations[87](index=87&type=chunk) [NOTE 10 — Leases](index=19&type=section&id=NOTE%2010%20%E2%80%94%20LEASES) This note details the company's operating sublease for its corporate headquarters, which commenced in November 2017 and expires in July 2021. - The company's primary lease commitment is an office sublease expiring July 31, 2021, with monthly rental rates escalating from **$14,808** to **$16,288**[89](index=89&type=chunk) **Future Operating Sublease Payments (as of March 31, 2019, in millions):** | Year | Waltham | | :--- | :------ | | 2019 (remaining) | $0.14 | | 2020 | $0.19 | | 2021 | $0.11 | | **Total Sublease payments** | **$0.45** | | Less: imputed interest | $(0.05) | | **Total operating Sublease liabilities** | **$0.40** | [NOTE 11 — Related Party Transactions](index=19&type=section&id=NOTE%2011%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) This note discloses a services agreement with V-Watch SA for approximately $105 thousand, where Minerva's CEO is the chairman of V-Watch's board. - Minerva entered into a **$105,000** services agreement with V-Watch SA for the use of its SomnoArt device in clinical trials[92](index=92&type=chunk) - This is considered a related party transaction as Minerva's CEO is the chairman of V-Watch's board, and a Minerva stockholder (Index Ventures) holds over **10%** of V-Watch's capital stock[92](index=92&type=chunk) [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) This section provides management's perspective on the company's financial condition and results of operations, highlighting its status as a clinical-stage biopharmaceutical company. [Overview](index=20&type=section&id=Overview) Minerva Neurosciences is a clinical-stage biopharmaceutical company focused on developing product candidates for central nervous system (CNS) diseases. - Minerva Neurosciences is a clinical-stage biopharmaceutical company focused on developing product candidates for central nervous system (CNS) diseases, with four proprietary compounds in its portfolio[95](index=95&type=chunk)[96](index=96&type=chunk) - The company has not received regulatory approvals for any product candidates and has not generated revenue from sales or licenses, expecting to incur net losses and negative cash flow for the foreseeable future[97](index=97&type=chunk) [Clinical Updates](index=20&type=section&id=Clinical%20Updates) This section provides updates on the clinical development progress of the company's key product candidates. [Roluperidone (MIN-101)](index=20&type=section&id=Roluperidone%20(MIN-101)) The Phase 3 clinical trial for roluperidone (MIN-101) for negative symptoms in schizophrenia is ongoing, with top-line results expected in Q4 2019. - Enrollment for the pivotal Phase 3 clinical trial of roluperidone for negative symptoms in schizophrenia is expected to complete in the second half of 2019, with top-line results available in Q4 2019[98](index=98&type=chunk)[100](index=100&type=chunk) - Pre-clinical studies showed roluperidone significantly increased Brain-Derived Neurotrophic Factor (BDNF) and Glial Cell-Derived Neurotrophic Factor (GDNF) release, suggesting potential for disease modification and improved neuroplasticity[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - The Journal of Clinical Psychiatry published results demonstrating cognitive improvements in schizophrenia patients treated with roluperidone, correlating with improvements in negative symptoms[107](index=107&type=chunk) [MIN-117](index=21&type=section&id=MIN-117) A Phase 2b trial for MIN-117 in Major Depressive Disorder (MDD) with anxious distress is ongoing, with top-line results expected in Q4 2019. - A Phase 2b trial for MIN-117 in MDD with anxious distress is recruiting approximately **324 patients** in the U.S. and Europe, with enrollment expected to complete in Q3 2019 and top-line results in Q4 2019[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - A U.S. patent application has been filed for MIN-117 to treat pain, based on pre-clinical rat models showing significant reduction in nociceptive and chemotherapy-induced neuropathic pain[111](index=111&type=chunk)[112](index=112&type=chunk) [Seltorexant (MIN-202)](index=22&type=section&id=Seltorexant%20(MIN-202)) Enrollment is complete for two Phase 2b trials of seltorexant in MDD and one in insomnia disorder, with top-line results expected in Q2 and Q3 2019. - Enrollment is complete for the Phase 2b 2001 Trial (MDD adjunctive therapy) and 2005 Trial (insomnia disorder), with top-line results expected in Q2 2019[113](index=113&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Enrollment is also complete for the Phase 2b 2002 Trial (seltorexant vs. quetiapine in MDD), with top-line results expected in Q3 2019[114](index=114&type=chunk)[117](index=117&type=chunk) [MIN-301](index=22&type=section&id=MIN-301) Pre-clinical studies of MIN-301 in non-human primates showed improvements in Parkinson's disease models, supporting its advancement towards clinical trials. - Results from a non-human primate study showed that treatment with an analog of MIN-301 improved symptoms in a Parkinson's disease model[120](index=120&type=chunk) - These findings support advancing MIN-301 into clinical trials for Parkinson's disease, with a Phase 1 study expected to commence after an IND or IMPD filing[120](index=120&type=chunk) [Financial Overview](index=24&type=section&id=Financial%20Overview) This section provides an overview of the company's revenue, expenses, and other financial components. [Revenue](index=24&type=section&id=Revenue) The company has not generated any revenue from product sales or licenses to date, but has deferred revenue from the Janssen co-development agreement. - Minerva has not recognized any revenue from product sales or licenses as none of its product candidates have been approved for commercialization[121](index=121&type=chunk) - Deferred Revenue from the Amendment to the Co-Development and License Agreement with Janssen will be recognized in future periods, subject to certain future events[121](index=121&type=chunk) [Research and Development Expenses](index=24&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses are expensed as incurred and are expected to be the largest category of operating expenses, increasing with ongoing trials. - Research and development expenses include fees for consultants, CROs, clinical trials, licensing, materials, regulatory compliance, and R&D employee compensation, all expensed as incurred[122](index=122&type=chunk) - R&D expenses are expected to increase as the company continues planned pre-clinical and clinical trials and hires additional R&D staff[123](index=123&type=chunk) [General and Administrative Expenses](index=24&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses cover executive, finance, legal, auditing, and tax functions, and are expected to increase due to public company operations. - General and administrative expenses primarily consist of costs for executive, finance, legal, auditing, and tax functions, including salaries, bonuses, facility costs, professional fees, and non-cash stock-based compensation[125](index=125&type=chunk) - These expenses are expected to increase due to operating as a publicly-traded company, compliance costs, investor relations, and infrastructure enhancements to support business growth[126](index=126&type=chunk) [Foreign Exchange (Losses) Gains](index=24&type=section&id=Foreign%20Exchange%20(Losses)%20Gains) Foreign exchange losses or gains arise from clinical trial expenses denominated in Euros, reflecting changes in currency rates. - Foreign exchange losses/gains result from clinical trial expenses denominated in Euros, reflecting currency rate fluctuations between the date an expense is recorded and the payment date[127](index=127&type=chunk) - The company expects to continue incurring Euro-denominated expenses as certain planned clinical trials are conducted in Europe[127](index=127&type=chunk) [Investment Income](index=24&type=section&id=Investment%20Income) Investment income is generated from the company's cash equivalents and marketable securities. - Investment income is derived from earnings on the company's cash equivalents and marketable securities[128](index=128&type=chunk) [Interest Expense](index=24&type=section&id=Interest%20Expense) Interest expense relates to the company's outstanding loan with Oxford Finance LLC and Silicon Valley Bank. - Interest expense is associated with the company's loan agreement with Oxford Finance LLC and Silicon Valley Bank[128](index=128&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing key financial metrics between the reported periods. [Comparison of Three Months Ended March 31, 2019 versus March 31, 2018](index=24&type=section&id=Comparison%20of%20Three%20Months%20Ended%20March%2031%2C%202019%20versus%20March%2031%2C%202018) This section compares the financial performance for the three months ended March 31, 2019, against the same period in 2018, detailing changes in key expense categories. - Research and development expenses increased by **$3.2 million** to **$11.6 million** in Q1 2019 (from **$8.4 million** in Q1 2018), primarily due to higher development expenses for roluperidone Phase 3 and MIN-117 Phase 2b clinical trials[129](index=129&type=chunk) - General and administrative expenses increased by **$0.4 million** to **$4.7 million** in Q1 2019 (from **$4.3 million** in Q1 2018), mainly due to increased non-cash stock-based compensation and salary costs[130](index=130&type=chunk) - Investment income increased by **$0.1 million** to **$0.5 million** in Q1 2019 (from **$0.4 million** in Q1 2018), while interest expense decreased by **$0.1 million** to zero due to the repayment of Term A loans[132](index=132&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations, including sources and uses of funds. [Sources of Liquidity](index=25&type=section&id=Sources%20of%20Liquidity) The company has incurred significant losses and negative cash flows, with existing cash resources expected to be sufficient for the next 12 months, but future funding is uncertain. - As of March 31, 2019, the company had an accumulated deficit of approximately **$230.4 million** and **$79.3 million** in cash, cash equivalents, marketable securities, and restricted cash[134](index=134&type=chunk) - Existing cash resources are believed to be sufficient for at least the next 12 months, but future expenditures are subject to variability based on clinical trial design, timing, and funding availability[134](index=134&type=chunk) [Sources of Funds](index=25&type=section&id=Sources%20of%20Funds) Key funding sources include an amendment to the co-development and license agreement with Janssen, a public offering of common stock, and proceeds from warrant exercises. - The Amendment to the Co-Development and License Agreement with Janssen provided a **$30 million** upfront payment in August 2017 and includes future milestone payments of **$20 million** at the start of a Phase 3 insomnia trial and another **$20 million** at **50%** patient enrollment[135](index=135&type=chunk) - A public offering of common stock in July 2017 generated net proceeds of approximately **$41.6 million** from the sale of **5,750,000 shares** at **$7.75** per share[136](index=136&type=chunk) - The exercise of warrants in March 2017 generated gross proceeds of approximately **$9.4 million** from **1,621,073 shares** of common stock[137](index=137&type=chunk) [Uses of Funds](index=26&type=section&id=Uses%20of%20Funds) The company has not generated revenue and expects expenses to increase due to ongoing development activities, clinical trials, regulatory approvals, and public company operations. - The company has not generated revenue and expects increasing expenses from ongoing R&D, clinical trials, regulatory approvals, and public company operations, including potential commercialization costs[138](index=138&type=chunk) - Future cash needs are expected to be financed through equity offerings, debt financings, third-party funding, or collaborations, which may lead to stockholder dilution or restrictive covenants[139](index=139&type=chunk) - The company fully repaid its **$10.0 million** Term A Loan on August 1, 2018[140](index=140&type=chunk) [Cash Flows](index=26&type=section&id=Cash%20Flows) This section summarizes the company's cash flows from operating, investing, and financing activities for the three months ended March 31, 2019 and 2018. **Net Cash Flows (in millions):** | Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(9.6) | $(10.9) | | Investing activities | $(10.5) | $31.3 | | Financing activities | $0.5 | $(1.3) | | **Net (decrease) increase in cash** | **$(19.6)** | **$19.1** | - Net cash used in operating activities decreased to **$9.6 million** in Q1 2019 from **$10.9 million** in Q1 2018, primarily due to changes in operating assets and liabilities offsetting the net loss[143](index=143&type=chunk)[144](index=144&type=chunk) - Net cash used in investing activities was **$10.5 million** in Q1 2019, a significant shift from **$31.3 million** provided in Q1 2018, mainly due to increased purchases of marketable securities[145](index=145&type=chunk)[146](index=146&type=chunk) - Net cash provided by financing activities was **$0.5 million** in Q1 2019 from stock option exercises, compared to **$1.3 million** used in Q1 2018 for loan repayments[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements during the periods presented. - The company did not have any off-balance sheet arrangements as defined under SEC rules during the periods presented[148](index=148&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies and estimates remain consistent with those disclosed in its 2018 Annual Report on Form 10-K. - The critical accounting policies and estimates for Q1 2019 remain consistent with those identified in the 2018 Annual Report on Form 10-K, covering areas such as stock-based compensation, R&D costs, IPR&D, goodwill, income taxes, and impairment of long-lived assets[149](index=149&type=chunk) [Recent Accounting Pronouncements](index=27&type=section&id=Recent%20Accounting%20Pronouncements) The company has adopted several new accounting pronouncements, including ASU No. 2016-02 (Leases), with no material impact except for lease assets and liabilities. - The company adopted ASU No. 2016-02 (Leases), ASU No. 2017-08 (Receivables—Nonrefundable Fees), and ASU No. 2018-07 (Stock Compensation) effective January 1, 2019[57](index=57&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - The adoption of ASC 842 (Leases) resulted in the recognition of **$0.4 million** in operating lease liabilities and right-of-use assets, but other pronouncements had no material impact on the consolidated financial statements[60](index=60&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - The company is currently evaluating the impact of ASU No. 2017-04 (Intangibles — Goodwill and Other), effective for annual periods beginning after December 15, 2019[64](index=64&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reported period. - The company has no applicable quantitative and qualitative disclosures about market risk for the reported period[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2019, concluding they were effective. - The company's disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of March 31, 2019[154](index=154&type=chunk) - There were no material changes in internal control over financial reporting during the latest fiscal quarter[155](index=155&type=chunk) [PART II — Other Information](index=28&type=section&id=PART%20II%20%E2%80%94%20Other%20Information) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits. [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings or claims that are expected to have a material adverse effect on its business. - The company is not currently party to any claim or litigation that is reasonably expected to have a material adverse effect on its business, financial condition, or results of operations[157](index=157&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company operates in a rapidly changing environment with inherent risks, including significant losses and the expectation of continued losses requiring additional capital. - The company has incurred significant losses since its inception in 2007, with a net loss of **$15.8 million** for Q1 2019 and an accumulated deficit of **$230.4 million** as of March 31, 2019[159](index=159&type=chunk)[160](index=160&type=chunk) - The company expects to continue incurring significant losses and will require additional capital to finance operations and complete product development, which may not be available on acceptable terms[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - Future funding requirements depend on factors such as clinical trial timing and costs, regulatory approvals, intellectual property maintenance, market acceptance, and commercialization expenses[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities or repurchase any equity securities during the three months ended March 31, 2019. - No unregistered securities were sold during the three months ended March 31, 2019[165](index=165&type=chunk) - No equity securities were repurchased during the three months ended March 31, 2019[166](index=166&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities applicable to the company for the reported period. - This item is not applicable to the company for the reported period[167](index=167&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures applicable to the company for the reported period. - This item is not applicable to the company for the reported period[168](index=168&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information applicable to the company for the reported period. - This item is not applicable to the company for the reported period[169](index=169&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits incorporated by reference or filed as part of the report, including organizational documents and certifications. - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, an Employment Agreement, CEO and CFO certifications (Sarbanes-Oxley Act Sections 302 and 906), and XBRL related documents[171](index=171&type=chunk) [SIGNATURES](index=32&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy and completeness of the financial report. - The report is signed by Geoffrey Race, Chief Financial Officer (Principal Financial Officer) on behalf of Minerva Neurosciences, Inc. on May 6, 2019[174](index=174&type=chunk)[175](index=175&type=chunk)

Minerva Neurosciences, Inc. (NASDAQ:NERV) Q4 2018 Earnings Conference Call March 12, 2019 8:30 AM ET Company Participants William Boni - Vice President of Investor Relations & Corporate Communications Remy Luthringer - Executive Chairman & Chief Executive Officer Rick Russell - President Geoff Race - Executive Vice President, Chief Financial Officer & Chief Business Officer Conference Call Participants Jason Butler - JMP Securities Joel Beatty - Citi Biren Amin - Jefferies Operator Welcome to the Minerva Ne ...