Minerva Neurosciences(NERV) - 2021 Q3 - Quarterly Report

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