
PART I — Financial Information Financial Statements 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 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 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 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 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-30122 - 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 programs2526 - 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 revenue76 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 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 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 2020102 - 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 2019115 - 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 placebo119 - In a Phase 2b trial for insomnia, seltorexant demonstrated highly statistically significant (p ≤ 0.001) improvement in Latency to Persistent Sleep (LPS), the primary endpoint131 Results of Operations 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-117144149 - The increase in G&A expenses was mainly due to higher professional fees for pre-commercial activities and increased non-cash stock-based compensation145150 Liquidity and Capital Resources 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, 2019154 - 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 candidates154160 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 This item is not applicable for the reporting period - The company states that this section is not applicable173 Controls and Procedures 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, 2019175 - 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 controls176 PART II — Other Information Legal Proceedings 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 proceedings178 Risk Factors 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 million181 - 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 programs183185 - 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 trial186 Unregistered Sales of Equity Securities and Use of Proceeds 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 2019187 - The company did not repurchase any of its equity securities during the third quarter of 2019188 Other Information 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, 2019191 - The updated bylaws designate the Court of Chancery of the State of Delaware as the exclusive forum for specific types of stockholder litigation191 Exhibits 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