You should read the following discussion of our financial condition and results
of operations in conjunction with our condensed consolidated financial
statements and the notes thereto included elsewhere in this Quarterly Report on
Form 10-Q and with our annual audited consolidated financial statements included
in our Annual Report on Form 10-K for the year ended
with the
Overview
We are a clinical-stage biopharmaceutical company focused on the development and
commercialization of proprietary product candidates to treat patients suffering
from central nervous system (“CNS”) diseases. Leveraging our scientific insights
and clinical experience, we have acquired or in-licensed compounds that we
believe have innovative mechanisms of actions and therapeutic profiles that
potentially address the unmet needs of patients with these diseases.
We are developing roluperidone for the treatment of negative symptoms in
patients with schizophrenia and have exclusive rights to develop and
commercialize MIN-301 for the treatment of Parkinson’s disease. In addition, we
previously co-developed seltorexant with
for the treatment of insomnia disorder and adjunctive treatment of Major
Depressive Disorder (“MDD”). During 2020, we exercised our right to opt out of a
joint development agreement with Janssen for the future development of
seltorexant. As a result, we were entitled to collect royalties in the
mid-single digits on potential future sales of seltorexant worldwide in certain
indications, with no further financial obligations to Janssen. In
we sold our rights to these potential royalties to Royalty Pharma plc (“Royalty
Pharma”).
We have not received regulatory approvals to commercialize any of our product
candidates, and we have not generated any revenue from the sales or license of
our product candidates. We have incurred significant operating losses every year
since inception. We expect to incur net losses and negative cash flow from
operating activities for the foreseeable future in connection with the clinical
development and the potential regulatory approval, infrastructure development
and potential commercialization of our product candidates.
Clinical and Regulatory Updates
On
2, 2022
Psychiatry
roluperidone’s use as a monotherapy for negative symptoms in patients with
schizophrenia.
The Division agreed that there is an unmet need for negative symptom treatments
and restated its position following the
they indicated a marketing application was highly unlikely to be filed. The
Division also stated at the
would be substantial review issues due to the lack of two adequate and
well-controlled trials to support efficacy claims for this novel indication. The
Division acknowledged at the time that the studies appear to show promising
signals and encouraged us to continue the drug development program for this
indication. Since the Type C meeting in
Open-label extension of the Phase 3 study and have continued to develop
roluperidone as a monotherapy specifically for the treatment of negative
symptoms of schizophrenia in the subgroup of patients with moderate to severe
negative symptoms and stable positive symptoms. The Division advised that
several important and substantial concerns remain, including:
•
the applicability of the results of the Phase 2b study (conducted in
the
Division in advance of the meeting showing comparable baseline data and efficacy
across both
•
the proposed use of post hoc analyses for the primary endpoint results of the
Phase 3 study. The Division added that even with the exclusion of one trial site
that we believe to be subject to potential data integrity issues, the overall
study remains negative. For the Phase 3 study to be positive, where the
truncated Hochberg procedure was used to control the overall Type I error, both
roluperidone doses must be statistically significant versus placebo, which was
not the case for the 32 mg dose. We confirmed in post-meeting follow-up that the
exclusion of one site had been prespecified in the SAP submitted to the Division
in
site with data integrity issues resulted in a nominal p-value of 0.044 on the
primary endpoint for the 64 mg dose. In the Phase 2b study, the 64 mg and the 32
mg doses of roluperidone achieved statistical significance versus placebo.
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The Division sought reassurance that we could reliably identify patients who do
not need antipsychotics and how to evaluate the stability of those patients, and
potential recurrence of positive symptoms of those patients, what would be
considered a significant change in symptoms, how much time patients should be
monitored to evaluate whether positive symptoms will recur, and what should be
done if positive symptoms recur. We informed the Division that we believe this
patient population can be readily identified by clinicians, that this patient
population presents commonly in clinical practice, that there is an unmet need
for treatments for these patients and that we expect that the population could
be clearly characterized in product labelling.
The Division pointed out that prescribers are likely to use roluperidone in a
way that differs significantly from the intended monotherapy use, noting that at
this time, there are no data to show that roluperidone does not interfere with
the safety or efficacy of antipsychotic medications. We stated that we believe
that findings from the completed Phase 2b (MIN101-C03) and Phase 3 (MIN101-C07)
studies, (in which roluperidone was administered in monotherapy without
concomitant use of antipsychotic medications), demonstrate continued stability
of positive symptoms in patients over time. We stated that the relapse rate in
these trials was less than 15% of the treated population compared to relapse
rates of more than 25% in other trials in which patients were treated with
antipsychotics. Following the meeting, we submitted additional data to the
Division from the Phase 2b and Phase 3 studies demonstrating that roluperidone
does not interfere with the efficacy of antipsychotics in patients who suffered
from relapse and withdrew from the studies.
The Division confirmed that results from the pivotal bridging Bioequivalence
study appear to be adequate for a future acceptable New Drug Application (“NDA”)
submission but advised that final confirmation of this would be a matter of
review and also acknowledged that our initial pediatric study plan (“iPSP”)
dated
We continue to believe that we have conducted two adequate and well controlled
studies for the intended indication, and that the data from these studies are
sufficient to support a marketing application. We view the concerns raised
regarding the data from the Phase 2b and Phase 3 studies as those that FDA would
ordinarily consider during its review of an NDA.
At the end of the meeting, the Division suggested that there may be a way to
address its concerns, whether the completed studies provide substantial evidence
that negative symptoms are responsive to roluperidone, concurrently with the
questions about positive symptoms and coadministration with antipsychotic
medication through the acquisition of additional data. The Division advised that
collection of additional data could begin in parallel with our preparations for
a potential marketing application and need not be deferred until a determination
about submission or filing of the application has been made.
Subject to the timing and feedback from the FDA, we continue to prepare for a
potential submission of an NDA for roluperidone during the third quarter of
2022.
Financial Overview
Revenue. None of our product candidates have been approved for commercialization
and we have not received any revenue in connection with the sale or license of
our product candidates.
Research and Development Expenses. Research and development costs are expensed
as they are incurred and consist principally of costs incurred in connection
with the development of our product candidates including: fees paid to
consultants and clinical research organizations (“CROs”), investigator grants,
patient screening, lab work, database management, material management,
statistical analysis, license fees, regulatory compliance, and costs related to
salaries, benefits, bonuses and stock-based compensation granted to employees in
research and development functions.
Completion dates and costs can vary significantly by product candidate and are
difficult to predict. We anticipate making determinations as to which programs
to pursue and the level of funding to direct to each program on an ongoing basis
in response to the scientific and clinical success or failure of each product
candidate, the estimated costs to continue the development program relative to
our available resources, as well as an ongoing assessment of each product
candidate’s commercial potential. We will need to raise additional capital or
may seek additional product collaborations in the future to complete the
development and commercialization of our product candidates.
General and Administrative Expenses. General and administrative costs are
expensed as they are incurred and consist principally of costs for facility and
information systems, professional fees for auditing, consulting and legal
services and costs related to salaries, benefits, bonuses and stock-based
compensation granted to employees in administrative functions. General and
administrative expenses also include costs for maintaining a publicly listed
company including increased audit and legal fees, compliance with securities
laws, corporate governance and investor relations.
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Foreign Exchange Gains (Losses). Foreign exchange gains (losses) are comprised
primarily of gains and losses on foreign currency transactions primarily related
to research and development expenses. We incur certain expenses, primarily in
Euros, and record these expenses in
liability is incurred. Changes in the applicable foreign currency rate between
the date that an expense is recorded and the payment date is recorded as a
foreign currency gain or loss.
Investment Income. Investment income consists of income earned on our cash
equivalents and marketable securities.
Non-cash interest expense for the sale of future royalties. Non-cash interest
expense for the sale of future royalties consists of the non-cash interest
expense associated with the Royalty Pharma agreement.
Results of Operations
Comparison of Three Months Ended
Research and Development Expenses
Research and development expenses were
three months ended
approximately
was primarily due to lower costs for the Phase 3 clinical trial of roluperidone
as a result of the completion of the 40-Week Open-Label Extension in
Non-cash stock compensation expense included in research and development
expenses was
2022
General and Administrative Expenses
General and administrative expenses were
three months ended
approximately
was primarily due to lower staffing related expenses, non-cash stock
compensation expense, and lower legal and insurance costs. Non-cash stock
compensation expense included in general and administrative expenses was
million
respectively.
Foreign Exchange Gains (Losses)
Foreign exchange gains were
the three months ended
currency movements.
Investment Income
Investment income was
2022
interest rates.
Non-cash interest expense for the sale of future royalties
Non-cash interest expense for the sale of future royalties was
increase of
interest rate during 2022 and the increase in the carrying value of the
liability related to the sale of future royalties for seltorexant to Royalty
Pharma in accordance with ASC 470, Debt.
Comparison of Six Months Ended
Research and Development Expenses
Research and development expenses were
months ended
due to lower costs for the Phase 3 clinical trial of roluperidone as a result of
the completion of the 40-Week Open-Label Extension in
consulting fees related to the NDA support activities. Non-cash stock
compensation expense included in research and development expenses was
million
respectively.
General and Administrative Expenses
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General and administrative expenses were
six months ended
approximately
was primarily due to lower staffing related expenses, non-cash stock
compensation expense, and lower legal and insurance costs. Non-cash stock
compensation expense included in general and administrative expenses was
million
respectively.
Foreign Exchange Losses
Foreign exchange losses were
30, 2022
exchange losses was primarily due to positive currency movements.
Investment Income
Investment income was
and 2021, respectively, an increase of
to higher interest rates.
Non-cash interest expense for the sale of future royalties
Non-cash interest expense for the sale of future royalties was
increase of
interest rate during 2022 and the increase in the carrying value of the
liability related to the sale of future royalties for seltorexant to Royalty
Pharma in accordance with ASC 470, Debt.
Liquidity and Capital Resources
Sources of Liquidity
As of
million
foreseeable future as we continue the development and potential
commercialization of our product candidates and to support our operations as a
public company. At
cash equivalents, and restricted cash. In
our royalty interest in seltorexant for an upfront payment of
to an additional
future milestone payments to us will be contingent on the achievement of certain
clinical, regulatory and commercialization milestones for seltorexant by
Janssen. Seltorexant is currently in Phase 3 development for the treatment of
MDD with insomnia symptoms by Janssen. We believe that our existing cash, cash
equivalents and restricted cash will be sufficient to meet our cash commitments
for at least the next 12 months after the date that the financial statements are
issued. Our material cash requirements primarily relate to expenditures for the
continued development of roluperidone and NDA preparation activities.
Sources of Funds
At-the-Market Equity Offering Program
In
to which we may offer and sell, from time to time, through Jefferies, up to
deemed to be an “at-the-market” offering as defined in Rule 415 promulgated
under the Securities Act of 1933, as amended. During the year ended
2020
Agreement. The shares were sold at an average price of
aggregate net proceeds to us of approximately
sales commissions and offering costs payable by us. During the six months ended
Agreement.
Seltorexant Royalties
We previously co-developed seltorexant with Janssen for the treatment of
insomnia disorder and adjunctive treatment of MDD. During 2020, we exercised our
right to opt out of a joint development agreement with Janssen for the future
development of seltorexant. As a result, we were entitled to collect royalties
in the mid-single digits on potential future sales of seltorexant worldwide in
certain indications, with no further financial obligations to Janssen.
19 --------------------------------------------------------------------------------
On
acquired our royalty interest in seltorexant for an upfront payment of
million
contingent upon the achievement of certain clinical, regulatory and commercial
milestones for seltorexant by Janssen.
Uses of Funds
To date, we have not generated any revenue from sales of products. We have only
generated collaborative revenue due to opting out of our license and
co-development agreement with Janssen. Furthermore, the
received from Royalty Pharma for the sale of our royalty interests in
seltorexant has been included on our balance sheet under Liability related to
the sale of future royalties. We do not know when, or if, we will generate any
revenue from sales of our products, or from the potential future non-cash
royalty revenue associated with the sale of our royalty interests in seltorexant
to Royalty Pharma. We do not expect to generate significant revenue from product
sales unless and until we obtain regulatory approval of and commercialize any of
our product candidates. At the same time, we expect our expenses to increase in
connection with our ongoing development activities, particularly as we continue
the research, development and clinical trials of, and seek regulatory approval
for, our product candidates. We also expect to continue to incur costs
associated with operating as a public company. In addition, subject to obtaining
regulatory approval of any of our product candidates, we expect to incur
significant commercialization expenses for product sales, marketing,
manufacturing and distribution.
Until such time, if ever, as we can generate substantial revenue from product
sales, we expect to finance our cash needs through a combination of equity
offerings, debt financings, government or other third-party funding,
commercialization, marketing and distribution arrangements and other
collaborations, strategic alliances and licensing arrangements. To the extent
that we raise additional capital through the sale of equity or convertible debt
securities, the ownership interests of our common stockholders will be diluted,
and the terms of these securities may include liquidation or other preferences
that adversely affect the rights of our common stockholders. Additional debt
financing, if available, may involve agreements that include covenants limiting
or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends. If we raise
additional funds through government or other third-party funding,
commercialization, marketing and distribution arrangements or other
collaborations, strategic alliances or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future
revenue streams, research programs or product candidates or to grant licenses on
terms that may not be favorable to us. There can be no assurance that such
additional funding, if available, can be obtained on terms acceptable to us, and
the uncertainty and volatility in the capital markets caused by the continuing
COVID-19 pandemic may negatively impact the availability and cost of capital. If
we are unable to obtain additional financing, future operations would need to be
scaled back or discontinued. We believe that our existing cash, cash
equivalents, and restricted cash will be sufficient to meet our cash commitments
for at least the next 12 months after the date that the interim condensed
consolidated financial statements are issued. The timing of future capital
requirements depends upon many factors including the size and timing of future
clinical trials, the timing and scope of any strategic partnering activity and
the progress of other research and development activities.
Cash Flows
The tables below set forth our significant sources and uses of cash for the
periods.
Six Months Ended June 30,
2022 2021
(dollars in millions)
Net cash (used in) provided by:
Operating activities $ (11.0 ) $ (11.1 )
Investing activities - -
Financing activities - 60.0
Net (decrease) increase in cash
Net cash used in operating activities of approximately
six months ended
and a
interest expense for the sale of future royalties of
compensation expense of
expense, and an increase in accrued expenses of
Net cash used in operating activities of approximately
six months ended
partially offset by stock-based compensation expense of
interest expense for the sale of future royalties of
million
payable, and an increase in accrued expenses of
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Net Cash Provided by Investing Activities
Net cash provided by investing activities was zero during the six months ended
Net Cash Provided by Financing Activities
Net cash provided by financing activities was zero during the six months ended
Net cash provided by financing activities of
ended
Reverse Stock Split
On
Restated Certificate of Incorporation (the “Amendment”) with the Secretary of
State of the
split of our outstanding common stock. The Amendment became effective at
p.m. Eastern Time
reverse stock split was approved by our stockholders at our 2022 Annual Meeting
of Stockholders held on
reverse stock split was subsequently approved by our board of directors on
10, 2022
The Amendment provided that, at the effective time of the Amendment, every eight
(8) shares of our issued and outstanding common stock automatically combined
into one issued and outstanding share of common stock, without any change in par
value per share. The reverse stock split affected all shares of our common stock
outstanding immediately prior to the effective time of the Amendment. As a
result of the reverse stock split, proportionate adjustments were made to the
per share exercise price and/or the number of shares issuable upon the exercise
or vesting of all stock options, restricted stock units and restricted stock
awards issued by us and outstanding immediately prior to the effective time of
the Amendment, which resulted in a proportionate decrease in the number of
shares of our common stock reserved for issuance upon exercise or vesting of
such stock options, restricted stock units and restricted stock awards, and, in
the case of stock options, a proportionate increase in the exercise price of all
such stock options. In addition, the number of shares reserved for issuance
under our equity compensation plans immediately prior to the effective time of
the Amendment was reduced proportionately. The reverse stock split did not
affect the number of shares of common stock authorized for issuance under our
Amended and Restated Certificate of Incorporation, which remained at 125,000,000
shares.
No fractional shares were issued as a result of the reverse stock split.
Stockholders of record who would otherwise have been entitled to receive a
fractional share received a cash payment in lieu thereof. The reverse stock
split affected all stockholders proportionately and did not affect any
stockholder’s percentage ownership of our common stock (except to the extent
that the reverse stock split results in any stockholder owning only a fractional
share). As a result of the reverse stock split, the number of our outstanding
shares of common stock as of
shares to 5,340,193 (post-split) shares.
All share and per share amounts in the accompanying financial statements,
related footnotes, and management’s discussion and analysis have been adjusted
retroactively to reflect the reverse stock split as if it had occurred at the
beginning of the earliest period presented. Our common stock began trading on
The Nasdaq Global Market on a split-adjusted basis when the market opened on
Critical Accounting Policies and Estimates
In our Annual Report on Form 10-K for the fiscal year ended
our most critical accounting policies and estimates upon which our financial
status depends were identified as those relating to research and development
costs; in-process research and development; goodwill; income taxes; and the
liability related to the sale of future royalties. We reviewed our policies and
determined that those policies were our most critical accounting policies for
the six months ended
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the
Accounting Standards Board
date. See Note 2 of our Annual Report on Form 10-K for the fiscal year ended
appearing elsewhere in this Form 10-Q for a description of recent accounting
pronouncements applicable to our financial statements. We believe that the
impact of recently issued, but not yet adopted, accounting pronouncements will
not have a material impact on the condensed consolidated financial statements or
do not apply to our operations.
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