Intra-Cellular Therapies(ITCI) - 2022 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2022, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with accompanying notes Condensed Consolidated Balance Sheets The balance sheet shows a significant increase in total assets to $868.6 million as of March 31, 2022, from $489.9 million at year-end 2021, primarily driven by a substantial rise in cash, cash equivalents, and investment securities from a public stock offering in January 2022, while total liabilities remained relatively stable and stockholders' equity increased significantly from $417.9 million to $792.8 million | Account | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | 129,295 | 92,365 | | Investment securities, available-for-sale | 642,553 | 319,968 | | Total Assets | 868,580 | 489,922 | | Current Liabilities | 59,074 | 53,357 | | Total Liabilities | 75,830 | 72,032 | | Total Stockholders' Equity | 792,750 | 417,890 | Condensed Consolidated Statements of Operations For the first quarter of 2022, the company reported a significant increase in net product sales to $34.8 million, more than double the $15.6 million from the same period in 2021, though operating expenses also rose substantially, with R&D costs increasing to $29.0 million and SG&A expenses growing to $75.5 million, resulting in a higher net loss of $72.1 million, or ($0.78) per share, compared to a net loss of $52.7 million, or ($0.65) per share, in Q1 2021 | Account | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Product sales, net | 34,755 | 15,579 | | Total revenues | 34,996 | 15,878 | | Research and development | 29,043 | 15,058 | | Selling, general and administrative | 75,460 | 52,584 | | Total operating expenses | 107,658 | 69,097 | | Loss from operations | (72,662) | (53,219) | | Net loss | (72,119) | (52,740) | | Net loss per common share | (0.78) | (0.65) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $82.8 million in Q1 2022 from $47.8 million in Q1 2021, reflecting higher operating losses, while investing activities used $322.0 million primarily for purchasing investment securities, and financing activities provided $441.8 million in cash, almost entirely from the net proceeds of a public stock offering in January 2022, resulting in a net increase in cash, cash equivalents, and restricted cash of $36.9 million for the quarter | Cash Flow Activity | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (82,849) | (47,767) | | Net cash provided by (used in) investing activities | (322,035) | 116,269 | | Net cash provided by financing activities | 441,814 | 1,432 | | Net increase in cash, cash equivalents, and restricted cash | 36,930 | 69,934 | Notes to Condensed Consolidated Financial Statements The notes provide details on the company's organization, accounting policies, and specifics on financial statement line items, including the FDA approval of CAPLYTA for bipolar depression in December 2021, a successful $433.7 million net proceeds public offering in January 2022, concentration of credit risk with three major wholesalers, and royalty commitments to Bristol-Myers Squibb (BMS) for lumateperone sales - In December 2021, the FDA approved CAPLYTA for treating depressive episodes in adults with bipolar I or II disorder, both as monotherapy and adjunctive therapy, following its initial approval for schizophrenia in December 2019[26] - On January 7, 2022, the company completed a public offering of common stock, raising net proceeds of approximately $433.7 million after expenses[27] - For Q1 2022, 97% of product sales were to three major wholesalers, accounting for approximately 43%, 28%, and 26% of sales, respectively[33] - The company is obligated to pay Bristol-Myers Squibb (BMS) tiered single-digit percentage royalties (ranging from 5-9%) on sales of licensed products like lumateperone[50] Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an overview of the business, focusing on the commercialization of CAPLYTA for schizophrenia and bipolar depression, and the progress of its clinical development pipeline, analyzing financial results for Q1 2022, highlighting significant revenue growth alongside increased R&D and SG&A expenses, and discussing the company's strong liquidity position following a recent stock offering and potential impacts from COVID-19 and other operational risks Overview The company is focused on commercializing CAPLYTA, which was approved for bipolar depression in December 2021, leading to an expansion of the sales force to approximately 320 representatives, while the development pipeline for lumateperone is advancing with Phase 3 trials for Major Depressive Disorder (MDD) and a long-acting injectable (LAI) formulation, and other key programs include ITI-1284 for dementia-related behaviors, lenrispodun (ITI-214) for Parkinson's disease, and ITI-333 for substance use disorders - Following the December 2021 FDA approval of CAPLYTA for bipolar depression, the company expanded its sales force from approximately 240 to 320 representatives to support the new indication's launch[58] - The company's pipeline includes lumateperone in Phase 3 for Major Depressive Disorder (MDD), a long-acting injectable (LAI) formulation of lumateperone, ITI-1284 for dementia-related agitation, lenrispodun for Parkinson's disease, and ITI-333 for substance use disorders[59][61][63] Results of Operations Total net revenues for Q1 2022 were $35.0 million, a significant increase from $15.9 million in Q1 2021, driven by CAPLYTA sales for both schizophrenia and the newly launched bipolar depression indication, while R&D expenses rose 93% to $29.0 million due to increased clinical trial activity, and Selling, general, and administrative (SG&A) expenses increased 44% to $75.5 million, reflecting higher commercialization costs, with the cost of product sales remaining favorably low as the company continues to sell inventory expensed as R&D prior to FDA approval | Account | Q1 2022 ($ thousands) | Q1 2021 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues, net | 34,996 | 15,878 | +120.4% | | Cost of product sales | 3,155 | 1,455 | +116.8% | | Research and development | 29,043 | 15,058 | +92.9% | | Selling, general and administrative | 75,460 | 52,584 | +43.5% | | Loss from operations | (72,662) | (53,219) | +36.5% | | Net loss | (72,119) | (52,740) | +36.7% | - The increase in R&D expenses was primarily due to an $8.9 million increase for lumateperone clinical trials and a $5.3 million increase for other projects, including ITI-1284, ITI-214, and ITI-333 programs[88] - The increase in selling costs to $56.1 million from $38.3 million was driven by higher sales-related labor costs ($7.6M), marketing expenses ($6.5M), and travel costs ($3.6M) to support the commercialization of CAPLYTA[93] Liquidity and Capital Resources The company's financial position is strong, with approximately $773.2 million in cash, cash equivalents, and investments as of March 31, 2022, significantly bolstered by the $433.7 million in net proceeds from a January 2022 public stock offering, and management believes these funds are sufficient to cover operating expenses and capital requirements for at least the next 12 months, despite anticipating increased spending on the commercialization of CAPLYTA and ongoing clinical development programs - As of March 31, 2022, the company had a total of approximately $773.2 million in cash, cash equivalents, available-for-sale investment securities, and restricted cash[99] - A public offering of common stock completed on January 7, 2022, provided net proceeds of approximately $433.7 million[98] - The company expects its existing cash, cash equivalents, and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements for at least the next 12 months from the filing date of this report[100] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are identified as interest rate sensitivity, inflation, and capital market risk, with the main objective of its investment activities being capital preservation, and while rising interest rates led to a $3.3 million unrealized loss on investments as of March 31, 2022, the company does not expect to recognize these losses as it plans to hold investments to maturity, also acknowledging its dependence on capital markets for future funding - The company's primary market risk is interest rate sensitivity on its investment portfolio, with a recent increase in interest rates resulting in an unrealized loss of approximately $3.3 million as of March 31, 2022[118] - The company's ability to raise future funds depends on capital market forces affecting its stock price[120] Controls and Procedures The company's principal executive officer and principal financial officer evaluated the disclosure controls and procedures and concluded they were effective as of March 31, 2022, with no changes to the company's internal control over financial reporting identified during the quarter - The company's management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[121] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[122] PART II: OTHER INFORMATION Legal Proceedings The company states that it is not a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[124] Risk Factors The company highlights its reliance on third parties for conducting clinical trials and notes that there have been no other material changes to the risk factors disclosed in its Annual Report, with a specific risk mentioned being the potential for delays and negative impacts on clinical trials due to political instability and conflict in regions like Ukraine and Russia, where the company has active clinical sites for its MDD and bipolar disorder programs - The company relies on third-party contract research organizations for clinical trials, and any failure on their part could lead to increased costs, delays, or prevention of commercialization[126][127][128] - The company has clinical trial sites in Ukraine and Russia for its MDD and bipolar disorder studies, and the ongoing conflict in the region poses a risk of delaying these trials and negatively affecting business operations[129] Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that there were no unregistered sales of equity securities during the quarter, and the company did not repurchase any of its equity securities in the quarter ended March 31, 2022 - The company did not have any unregistered sales of equity securities during the quarter ended March 31, 2022[130] - The company did not repurchase any of its equity securities during the quarter ended March 31, 2022[131] Exhibits This section lists the exhibits filed with the Form 10-Q, including the CEO and CFO certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act, and the financial statements formatted in Inline XBRL - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002[135]