Intra-Cellular Therapies(ITCI) - 2023 Q3 - Quarterly Report

PART I: FINANCIAL INFORMATION FINANCIAL STATEMENTS The company presents its unaudited condensed consolidated financial statements for the periods ended September 30, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $99,402 | $148,615 | | Investment securities, available-for-sale | $393,619 | $443,290 | | Total current assets | $702,425 | $737,957 | | Total assets | $717,664 | $754,780 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $103,092 | $83,236 | | Total liabilities | $116,983 | $98,710 | | Total stockholders' equity | $600,681 | $656,070 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $125,810 | $71,870 | $330,669 | $161,699 | | Total revenues, net | $126,173 | $71,870 | $332,271 | $162,445 | | Total operating expenses | $155,886 | $127,499 | $457,555 | $378,659 | | Loss from operations | ($29,713) | ($55,629) | ($125,284) | ($216,214) | | Net loss | ($24,258) | ($53,508) | ($111,095) | ($212,230) | | Net loss per share (Basic & Diluted) | ($0.25) | ($0.57) | ($1.16) | ($2.26) | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($122,138) | ($230,993) | | Net cash provided by (used in) investing activities | $58,119 | ($178,636) | | Net cash provided by financing activities | $14,806 | $452,972 | | Net (decrease) increase in cash | ($49,213) | $43,343 | - The company's primary commercial product is CAPLYTA® (lumateperone), approved for treating schizophrenia and bipolar depression in adults[22] - For the nine-month period ended September 30, 2023, 97% of product sales were concentrated among three major wholesalers[29] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management analyzes financial results, focusing on CAPLYTA® performance, operating expenses, and pipeline progress Overview The company focuses on commercializing CAPLYTA® while advancing its clinical pipeline for MDD and other indications - Lumateperone is in Phase 3 clinical development for Major Depressive Disorder (MDD), with topline results from Study 501 expected in Q1 2024 and Study 502 in Q2 2024[50] - Positive topline results were announced in March 2023 from Study 403, evaluating lumateperone for major depressive episodes with mixed features[51] - The development pipeline includes a long-acting injectable (LAI) formulation of lumateperone, ITI-1284-ODT-SL, lenrispodun, and ITI-333[54][55][56][58] Results of Operations CAPLYTA® sales drove strong revenue growth, though operating expenses also increased to support commercialization and R&D Financial Performance Comparison (in thousands) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $125,810 | $71,870 | $330,669 | $161,699 | | Cost of product sales | $9,129 | $5,850 | $23,043 | $13,655 | | SG&A Expenses | $105,207 | $88,375 | $305,144 | $264,151 | | R&D Expenses | $41,550 | $33,274 | $129,368 | $100,853 | | Net loss | ($24,258) | ($53,508) | ($111,095) | ($212,230) | - Net product sales of CAPLYTA® increased to $125.8 million in Q3 2023 from $71.9 million in Q3 2022, and to $330.7 million for the first nine months of 2023[71] - Cost of product sales remains favorably low because drug product manufactured prior to FDA approval is still being sold, an impact expected to continue in the near-term[72][73] - SG&A expenses increased 19% YoY for Q3 2023, primarily due to higher marketing, advertising, and sales force labor costs[74][75] - R&D expenses increased 25% YoY for Q3 2023, driven by higher costs for lumateperone clinical trials and other projects[82] Liquidity and Capital Resources The company holds sufficient capital to fund operations for at least 12 months, supported by strong product sales - As of September 30, 2023, the company had $494.8 million in cash, cash equivalents, and available-for-sale investment securities[86] - Management expects existing cash, securities, and product sales will be sufficient to fund operations for at least the next 12 months[88] - Net cash used in operating activities decreased by $108.9 million to $122.1 million for the nine months ended September 30, 2023, primarily due to higher sales[87] QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company faces market risks from interest rates, inflation, and capital market volatility - The company's primary investment objective is capital preservation and it does not believe it has material exposure to interest rate changes[106] - Inflation is expected to cause appreciable increases in clinical trial, selling, labor, and other operating costs if global trends continue[107] - Capital market risk is identified, as the ability to raise additional funds through equity offerings depends on market forces[108] CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[109] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are likely to materially affect, internal controls[110] PART II: OTHER INFORMATION LEGAL PROCEEDINGS A shareholder complaint regarding director compensation was settled with no damages paid by the company - A shareholder derivative complaint alleging excessive director compensation was settled, with the court approving the stipulation on July 17, 2023[112] - The settlement requires the board to amend its compensation policies but does not require any damages payments from the company or defendants[112] RISK FACTORS No material changes to the risk factors disclosed in the company's Annual Report on Form 10-K have occurred - There have been no material changes to the risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[113] UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES The company reports no unregistered sales or repurchases of its equity securities during the quarter - The company did not repurchase any of its equity securities during the quarter ended September 30, 2023[115] DEFAULTS UPON SENIOR SECURITIES This section is not applicable to the company - Not applicable[116] MINE SAFETY DISCLOSURES This section is not applicable to the company - Not applicable[117] OTHER INFORMATION An executive officer modified a Rule 10b5-1 trading plan on August 11, 2023 - On August 11, 2023, Michael I. Halstead, an executive officer, modified his Rule 10b5-1 Trading Plan to change the start date and increase the number of shares to be sold[118] EXHIBITS This section lists all exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data