Intra-Cellular Therapies Inc

NASDAQ:ITCI

Earnings Call Transcript 2018-Q2

[Operator]

Good morning, ladies and gentlemen and welcome to the Intra-Cellular Therapies second quarter 2018 earnings conference call. [Operator Instructions].

I would now like to turn the conference over to your host Dr. Juan Sanchez, Vice President of Investor Relations and Corporate Communications. You may begin.

[Juan Sanchez, executive]

Thank you, operator. Good morning and thank you all for joining us for today's conference call.

Our earnings press release providing a corporate update and details of the company's financial resources for the second quarter ended June 30, 2018 crossed the wire a short time ago and it's available on our website at intracellulartherapies.com.

Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Dr. Andrew Satlin, Executive Vice President and Chief Medical Officer; Dr. Kimberly Vanover, Senior Vice President of Clinical Development; Larry Hineline, Vice President and Chief Financial Officer; and Michael Halstead, Senior Vice President and General Counsel.

As a reminder, during today's call we will be making certain forward-looking statement. These statements may include statements regarding among other things, the efficacy, safety and intended utilization of the company's product development candidates, our clinical or non-critical plans, our plans to present or report additional data, the anticipated conduct and results of future clinical trials, plans regarding regulatory filings, future research and development, and possible uses of existing cash, and investment resources.

These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risk and uncertainties that may cause actual results to defer materially from those contained in the forward-looking statement.

These and other risks are described in our periodic filings made with the Securities and Exchange Commission including our quarterly and annual report. You're cautioned not to place undue reliance on these forward-looking statements and the company disclaims any obligation to update such statements.

I will now turn the call over to Sharon.

[Sharon Mates, executive]

Thanks, Juan. Good morning, everyone and thank you for joining us for today's conference call.

Today we will share our second quarter financial results for 2018, provide an overview of our progress with our programs and summarize our future plans. Then Larry will review our financial results and we'll open up the line for Q&A.

It's a busy and exciting time at Intra-Cellular Therapies. We will shortly complete our NDA submission of lumateperone for the treatment of schizophrenia. In addition, later this year we expect to reach important milestones for major programs including lumateperone, ITI-214, and ITI-333. Our updates today reflect the breadth and depth of our drug development pipeline. We also continue to build our team and we are pleased with the progress we have made in expanding our infrastructure as we prepare for the commercialization of lumateperone.

In connection with our NDA submission of lumateperone for the treatment of schizophrenia, let me remind you, we received fast-track designation and we recently initiated our rolling submission with the FDA. We requested fast-track designation for the treatment of schizophrenia based on clinical evidence that lumateperone has the potential to address unmet medical needs for the treatment of schizophrenia with significant improvement on several clinically significant safety parameters including metabolic, motor and cardiovascular issues associated with many currently available antipsychotic agents.

With over 2,000 people exposed to lumateperone today in 23 clinical trials including 2 positive well-controlled studies and supportive data from a third study, we believe our schizophrenia clinical development program provides strong evidence of the efficacy and favorable safety profile of lumateperone for the treatment of schizophrenia.

Last year, we completed the first part of our open label safety switching study in stable patients with schizophrenia demonstrating the safety of lumateperone in a real world setting. And later this year we plan to present results from the second part of the study, which follows patients up to 1 year.

In addition to the lumateperone schizophrenia milestones we anticipate that top line results from our first Phase III bipolar depression study or Study '401 will be available later this year. We also expect to conduct an interim analysis of our ongoing lumateperone Phase III clinical trial in patients with agitation associated with dementia including Alzheimer's disease.

We are also developing lumateperone for the treatment of depressive disorders and we plan to evaluate several indications. Based on preclinical studies demonstrating serotonergic and glutamatergic activity, which we previously described, we intend to evaluate lumateperone as a rapid-acting antidepressant and we expect to initiate a clinical trial later this year. As the year progresses we will share more details regarding our plans for this and other studies in depressive disorders.

In addition to the advancement of lumateperone programs, we have made substantial progress in our ITI-214 program. ITI-214 is a selective phosphodiesterase 1 or PDE1 inhibitor in development for the treatment of unmet needs in Parkinson's disease and other central nervous system disorders as well as for the treatment of heart failure.

In Parkinson's disease intracellular signaling through cyclic nucleotides occurs downstream of dopamine activation of the D1 receptor. As we have described in previous publications on the actions of PDE1 in the brain, inhibition of PDE1 prevents the breakdown of cyclic nucleotides both cyclic AMP and cyclic GMP thus enhancing these signaling pathways and thereby restoring dopamine signaling in the brain.

To test the effect of this inhibition in patients with Parkinson's disease we are conducting a Phase I/II randomized double-blind, placebo-controlled, multiple rising dose study of ITI-214. In this trial, patients with Parkinson's disease receive ITI-214 oral doses once daily for 7 days. The primary objective is to evaluate the safety and tolerability of ITI-214. Secondary objectives are to explore its potential utility to improve motor and non-motor symptoms.

Clinical conduct has been completed for the first 4 cohorts evaluating doses of 1, 3, 10 and 30 milligrams. At these doses ITI-214 was safe and generally well-tolerated. Based on this favorable safety and tolerability profile the study has been expanded to include a higher dose cohort of 90 milligrams and clinical conduct is ongoing. We anticipate results will be available later this year. This will inform the design of a Phase II study which is scheduled to start next year.

Due to the novelty of the mechanism of action of our PDE1 inhibitors in the heart, I would like to spend a little time on the science associated with ITI-214 and heart failure.

Recently in the online version of journal Circulation we and investigators from John Hopkins University showed that ITI-214 improved cardiac output in pre-clinical models to a different mechanism of action than available therapies for the treatment of heart failure. The data indicate that ITI-214 acts by a novel mechanism that involves modulation of adenosine A2B receptor signaling pathways to augment cardiac contractility.

Currently available heart failure drugs that strengthen heart contractions such as PDE3 inhibitors, amrinone/inamrinone and beta adrenergic agonists dobutamine increased both cyclic AMP and intracellular calcium in cardiac muscle cells thus increasing contractility. This has potentially dangerous complications such as inducing irregular heartbeats. ITI-214 enhanced cardiac contractility associated with elevating cyclic AMP but unlike these other drugs, did so without increasing intracellular calcium levels when studied in cardiac muscle cells. Whereas PDE3 inhibitors amplified [ the ] contraction and intracellular calcium levels when combined with beta adrenergic simulation. ITI-214 did not. Furthermore, the increased cardiac contractility induced by ITI-214 was unaltered by blocking beta adrenergic signaling but was prevented by blockade of adenosine A2B receptor signaling.

These experimental results demonstrate that ITI-214 exerts its effects by a distinct pathway involving adenosine A2B receptor signaling, which has been shown to be cardioprotective. Therefore, we believe these findings represent an exciting contribution to the field as the pharmacological profile of ITI-214 offers a potential new treatment for heart failure with a novel mechanism of actions that may provide an effective and safer alternative to beta-adrenergic agonists and PDE3 inhibitors for both acute and chronic use.

We are conducting a clinical trial of ITI-214 for the treatment of heart failure. This is a Phase I/II randomized double-blind, placebo controlled study of escalating single doses of ITI-214 to evaluate hemodynamic effects and safety in patients with systolic heart failure. The aim of the study is to determine whether the cardiac effect seen in pre-clinical models translates to patients.

We continue to make progress with the preclinical development of our other programs including our novel drug candidate ITI-333. Triple 3 has 3 key modes of action, it acts as a partial agonist at mu opioid receptors and as an antagonist at 5-HT2A and D1 receptors. In preclinical models triple 3 reduces pain and attenuates symptoms of oxycodone withdrawal without causing respiratory suppression, constipation, self-administration, physical dependence or withdrawal symptoms after chronic dosing.

The United States is faced with a profound substance abuse crisis and there is an urgent need to develop new drugs to treat opioid addiction and to provide safe, effective, non-addictive analgesics. According to the National Survey on Drug Use and Health, nearly 12 million people in the United States misused opioids in 2016. We are developing ITI-333 for the treatment of opioid and other substance use disorders and expect to examine triple 3 in pain and mood disorders. We plan to initiate a clinical program for substance use disorders next year.

Lastly, we ended the quarter with $403.8 million in cash and investments, which places us in a strong position to advance our development programs and commercial activities.

I will now turn the call over to Larry, who will review the financial results for the second quarter.

[Lawrence Hineline, executive]

Thanks, Sharon. I will be reviewing our financial results for the second quarter ended June 30, 2018 and provide an overview of our expectations for the use of our cash and investments. The net loss for the second quarter of 2018 was $37.4 million compared with a net loss of $17.8 million for the second quarter of 2017. Basic and diluted net loss was $0.68 per share for the second quarter of 2018, compared to a basic and diluted net loss of $0.41 per share for the same period in 2017.

Research and development expenses for the second quarter of 2018 were $32.4 million compared to $12.5 million for the second quarter of 2017. The increase for the second quarter of 2018 is primarily due to an increase of approximately $18.7 million of external clinical and non-clinical cost. In the second quarter of 2018, external costs were incurred for the Phase III clinical trials of lumateperone in patients with bipolar depression and in patients with agitation associated with dementia, other lumateperone-related trials, manufacturing cost and development cost for our PDE program. In the second quarter of 2017 external costs were incurred primarily for the Phase III clinical trials of lumateperone in patients with bipolar depression and dementia and other lumateperone-related trials.

General and administrative expenses for the second quarter of 2018 were $6.7 million, compared to $6.3 million for 2017. The comparative increase is primarily due to labor and pre-commercialization costs and is offset by lower stock compensation expense and professional fees.

Cash, cash equivalents and investment securities totaled $403.8 million at June 30, 2018 compared to $464.3 million at December 31, 2017. We expect that our existing cash, cash equivalents and investment securities of $403.8 million as of June 30, 2018 will be used primarily to advance the lumateperone development program, including; to fund clinical trials of lumateperone in patients with bipolar depression, in patients with agitation associated with dementia, depressive disorders; and other lumateperone clinical trials and related clinical and non-clinical activities, to fund pre-commercial activities for lumateperone for the treatment of schizophrenia and bipolar disorder; and if lumateperone receives regulatory approval, initial commercialization efforts to fund pre-commercial activities for lumateperone for the treatment of agitation associated with dementia, including Alzheimer's disease; to fund pre-clinical and clinical development of our ITI-007 long-acting injectable program, to fund non-clinical activities, including the continuation of manufacturing activities in conjunction with the development of lumateperone and other clinical and pre-clinical programs including our PDE development activities for the treatment of Parkinson's disease, heart failure and other disorders.

This concludes our prepared remarks. Operator, could you please open the line for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Brian Abrahams with RBC Capital Markets.

[Brian Abrahams, analyst]

Thanks very much for taking my questions and congratulations on all the progress. First question from me is on the NDA filing, wondering if you could give us any additional color on the progress there, I guess in terms of sort of like what still needs to be done and whether the -- whether priority review potential or -- and/or other pre-clinical toxic -- tox signal that was previously observed. Have it all been sort of part of the discussion or back and forths with the FDA as you go through the submission process? And then I had a follow up.

[Sharon Mates, executive]

Hi Brian, thanks for the question. This is Sharon and I'm going to ask Andy Satlin, our CMO to answer the question. I think it was in 3 or 4 parts, so I might chime in at one point. But, Andy?

[Andrew Satlin, executive]

Okay so maybe -- thanks Brian for the questions. Let me address the last question first. So the tox issue has been fully resolved and that's no longer an issue for this submission. With regard to the submission itself, as you know we had fast-track designation which allowed us to do the submission as a rolling NDA. And we have already begun that process by submitting and -- getting the NDA submissions. We expect to complete the submission shortly and we're on track to do that. We believe we have a strong package. We've had discussions with FDA and will update you going forward with regard to the type of review that this will get. We're focused on getting a first cycle approval, whether it's a standard or priority review. And whether it's a standard or priority review, our commercial preparations are on track for a launch in either case. So we're making good progress and we're confident of submitting the NDA shortly.

[Brian Abrahams, analyst]

And then maybe just a follow up on the Alzheimer's interim analysis. Can you give us a little bit more clarity on the potential scenarios there? Is that more of a resizing or are there -- is it possible that this study could stop early for either efficacy or futility. What are some of the, I guess, key scenarios and the key parameters that are being looked at to guide the different potential outcomes there? And I will hop back in the queue.

[Andrew Satlin, executive]

Yes. Sure. So thanks again. As you know we've pre-specified an interim analysis, which is to evaluate the assumptions regarding variability and the effect size in this trial. So after the interim analysis we will be able to as you suggest either stop the study, continue as planned, or we can adjust the sample size. We will be doing this interim later this year. We look forward to the results and any of those options are possible, including stopping for a success or a futility and/or proceeding or adjusting the sample size.

[Operator]

Our next question is from Jessica Fye with JP Morgan.

[Yuko Oku, analyst]

This is Yuko Oku on the call for Jessica thank you for taking our question. Would you set the stage for what we could learn from the results of the second stage of switching study expected later this year? And in addition with the initiation of the rolling NDA submission, which you announced the acceptance of the filings? And what are your current expectations for whether there will be an ADCOM?

[Andrew Satlin, executive]

Yes so, with regard to the long-term safety study, this is to collect long-term safety data to follow up on the excellent safety profile that we've already demonstrated in the short-term trial. We expect to be able to report the results of the trial -- of the long-term safety trial later this year. We are on track for everything with regard to what we need for safety for the NDA submission. And just remind me what you'd asked, what your last question was.

[Yuko Oku, analyst]

What the...

[Sharon Mates, executive]

I can answer, yes. We will announce acceptance of an NDA filing. I also just like to add to what Andy just said about the long-term safety study. As you know, we did a Part A of the safety switching study and what we're looking to see is if that trend continues and to see if we've maintained -- if we've been able to maintain that excellent safety profile. and we've seen nothing to suggest otherwise. And I think you had 1 more in there, but I don't remember it. [Technical Difficulty] So, as you know a sponsor does not get to request or not request an ADCOM, this is solely in the agency's purview. We would welcome an ADCOM, we believe we are a first in class. A new molecular action. So, under those terms, we could have an ADCOM and we would look forward to it. But again, it's not up to us.

[Operator]

Our next question from the line is Sumant Kulkarni with Canaccord.

[Sumant Kulkarni, analyst]

Thanks for taking the questions. I’ll ask both upfront. Could you give us any specific updates you have on the sleep disturbance program that you have on neuropsychiatric disorders on lumateperone? And second, what is your next step on the long-acting injectable program?

[Sharon Mates, executive]

Okay. So, I'll start now and turn it over to Andy afterwards. We are -- we did, several years ago, a Phase II study in sleep maintenance insomnia patients and we showed that we were able to decrease wakefulness during the night and improve sleep time and maintain or improve sleep architecture. We are not pursuing, at the moment, sleep maintenance insomnia as an indication, but rather we look at sleep disturbances within these neuropsychiatric diseases. On the -- and I’ll ask if Andy has anything else to fill in, in a minute. But on the LAI, we are proceeding through the pre-clinical development with the LAI and so we’ll have a long-acting injectable in clinical trial the -- what we don't think the LAI market is going to overtake the orals, but we think that it could be since we have such a great safety profile in our oral drugs that this might translate into a long-acting injectable that has a favorable safety profile as well and then possibly patients would like to stay on the long-acting injectable. Do you want to add anything?

[Andrew Satlin, executive]

Yes, not just but -- Sharon is right, we are not pursuing insomnia -- primary insomnia as an indication in and of itself but given the benefits that we see on sleep we do look at that as a potential additional benefit in a variety of other indication where sleep is expected including dementia including affective disorders in general so that does I think add to what we are going to be looking at in each of those program.

[Operator]

Our next question is from the line of Robert Hazlett with BTIG.

[Robert Hazlett, analyst]

Yes, just with regard to 214. Really intriguing data in terms of the biology, it's just released as you mentioned Sharon. Just strategically, the Parkinson's disease indication seemed to fit commercially well with the organization, the heart failure very intriguing biology and potential for cardiovascular indications maybe a different type of commercial infrastructure required. As you think about the different indications for 214, could you just comment strategically about how you're thinking about the development and then the future investment in this asset strategically?

[Sharon Mates, executive]

I’ll start again and then I'll ask if Andy or Kim have anything to add. I think the first -- we've gone where the science has taken us with our PDE1 inhibitors. We will, I think, the first thing we need to do is see the results of this study, we're very encouraged by the pre-clinical data and we're doing the translational science right now to see if what we've seen in pre-clinical models translate into humans. I would like to remind you that we’re looking at neuropsychiatric diseases of the elderly as well and elderly tend to have many cardiovascular disorders. And so we could be looking at these in the elderly and as we progress we’ll see where else we go with heart failure and other cardiovascular diseases.

[Robert Hazlett, analyst]

I guess just go back to lumateperone, just briefly, in terms of the depressive disorders indication, I know there's more to come later this year. Could you just give us a sense of how comprehensive that program might be again, given the activity the molecule seems like you could go a number of different directions? Any incremental sense would be helpful?

[Sharon Mates, executive]

I'll ask Andy to answer that. But please understand that, first of all, as we put the program together, we would -- we're not going to give you every single detail until we start the study. But with that I'll ask Andy to give you an overview.

[Andrew Satlin, executive]

No, I think you're absolutely right that there are a lot of opportunities because of the mechanism of action of this drug for use in a variety of depressive disorders. We're particularly excited about the pharmacology that involves the glutamatergic effects of the drugs through D1 activation with downstream effects that are similar in some respects to what is seen with ketamine, suggesting that the drug could have a rapid acting antidepressant effect. So that's one of the first things that we're going to be starting to look at with a study that we plan to start later this year. And where that study takes us will determine, in part, what we're going to pursue. But yes we're open to a variety of indications in the depressive area, in fact with affective disorders in general, if you look at the fact that we're already studying bipolar disorder, bipolar depression, and then the potential for other depressive illnesses.

[Operator]

Our next question is from Matt Kaplan with Ladenburg Thalmann.

[Matthew Kaplan, analyst]

A couple of questions on lumateperone and then 1 on 214. Can you give us some added details in terms of your preparation for commercialization given your very near term to completing your NDA filing? And then secondly, with the bipolar depression Phase III, the first mono therapy study, now that we're in the second half of 2018, can you give us any additional detail on the expected timing of these results for that program? And then with 214 and Parkinson's disease, I guess, how is your Phase I/II program progressing in PDE and can you comment on what you're seeing with the first 4 dose cohorts? And any thoughts on what will be the, I guess, therapeutic or a clinically relevant dose going forward?

[Sharon Mates, executive]

That's a lot of questions. I hope have -- anybody been writing all of them down?

[Matthew Kaplan, analyst]

I can go over them again.

[Sharon Mates, executive]

Okay, the commercialization was the first 1 and so I can address that. And we continue to build our team and you will hear about that as we progress through time, as people are coming on board, and so we are making advances in our infrastructure readiness as well. We’ve progressed in our sales force in managed care access strategies, and so we are -- all of our plans are coming together, and we are implementing them and we are very much in a hiring mode. And as we progress through the year, you'll hear more about this. And certainly upon acceptance of an NDA filing, you would hear even more, a lot more, they will trigger a lot more activity as well. So that’s the commercialization. Then, you asked about the Phase I/II and Parkinson's, Andy, you want to want to answer that?

[Andrew Satlin, executive]

I think the question was about the bipolar disorder or depression program so I can fill you in there. As you know, we’ve got 3 Phase III trials ongoing, they are all going well. The first trial, which is a U.S. based mono-therapy study, we plan to have results by the end of this year, and we will report those to you. We are progressing well with the other 2 trials and when we have, we would be able to file for this indication with 2 positive trials. We expect the second trial to report out next year. Then with regard to 214 and Parkinson's Disease, our Phase I/II ascending dose trial, has now completed 4 cohorts and we're in the midst of the fifth cohort. The study is progressing very well. It's primarily focused on safety and we've seen no signals that would preclude our going -- that would have precluded our going into a fifth cohort, which we've now done. That is proceeding. We will have results on this study, meaning, the first 5 cohorts -- the 5 cohorts that are currently done by -- later this year. There is a possibility for additional cohorts but we will have data by the end of the year, nevertheless. And then based on that, we will be making further decisions about the next steps with that program.

[Sharon Mates, executive]

So just to interject here, the cohorts are 8 patients each, 6 on drugs, 2 on placebo and it’s blinded. So we can't tell you anything about the signals for efficacy until it's un-blinded. Because we don't know who is in what cohort.

[Andrew Satlin, executive]

That’s right. Yes the study is designed to look for signals, but we will only be able to do that later. And look for signals, both for motor effect, non-motor effect, sleep effect as we mentioned before. So, we will report on that as well.

[Matthew Kaplan, analyst]

Just going back to the bipolar depression. Any greater detail you can give us and now we're in the second half of ‘18, in terms of when we should expect results from the first Phase III 401 study?

[Andrew Satlin, executive]

No, as we said it would be later this year.

[Operator]

And our next question is from Jason Butler with JMP Securities.

[Jason Butler, analyst]

I wanted a quick follow up on the interim analysis for the Phase III agitation. I mean you guys sound highly confident on the call [ that ] that will happen here, can you just reaffirm that that’s the case. And is it enrollment you see according to your expectations and is there anything you are seeing in the trial that increases your confidence one way or the other that resizing might or might not be needed?

[Sharon Mates, executive]

I'll start, it was very difficult to hear you, so I'm not sure we heard. I think the gist of it is some questions on the agitation study. And if we know anything and that's why you do the interim analysis. As you know, there are no approved indications -- and no drugs approved for this indication, sorry, so that's the purpose of the interim analysis, to help us see if our assumptions have been along the correct lines, and allowing us to either resize the study or make other adjustments in the study. I think that's what you were asking. I don't know, Andy you want to…

[Andrew Satlin, executive]

We are on track with sufficient information for the interim analysis to be conducted so we are confident we will be able to get something out of that.

[Jason Butler, analyst]

Okay so enrollments…

[Andrew Satlin, executive]

Yes, you broke up there we really can't hear you.

[Sharon Mates, executive]

We can't hear you.

[Jason Butler, analyst]

All right sorry about that.

[Sharon Mates, executive]

We heard that, thank you.

[Operator]

I'm not showing any further questions. I'll now turn the call back over to Dr. Mates for closing remarks.

[Sharon Mates, executive]

Great. Thank you everyone for participating in the call. We look forward to updating you as we make further progress later this year. And Operator, you can now disconnect the call.

[Operator]

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.