Intra-Cellular Therapies Inc

NASDAQ:ITCI

Earnings Call Transcript 2018-Q3

[Operator]

Good morning, ladies and gentlemen and welcome to the Intra-Cellular Therapies Third Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today's conference call is being recorded.

I'd now like to turn the conference over to your host, Dr. Juan Sanchez, Vice President of Corporate Communications and Investor Relations. Please go ahead.

[Juan Sanchez, Vice President of Investor Relations]

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 third quarter ended September 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 and Translation on Medicine; 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 statements. 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 ongoing and future clinical trials, plans regarding regulatory filings, future research and development, our plans regarding the commercialization of lumateperone 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 risks and uncertainties that may cause actual results to defer materially from those contained in the forward-looking statements.

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, Chairman and Chief Executive Officer]

Thanks, Juan. Good morning, everyone and thank you for joining us for today’s conference call. Today we will provide an overview of our progress with our programs, summarize our future plans, and provide our third quarter financial results. Andy will describe recently presented results from our Phase 1/2 evaluating ITI-214, our phosphodiesterase 1 inhibitor in patients with Parkinson’s disease. Finally, Larry will review our financial results and we will open the line for Q&A.

During the quarter, we completed the submission of our NDA to the U.S. FDA for lumateperone for the treatment of schizophrenia. Pending FDA acceptance of our NDA filing, we look forward to continuing to work with the agency with the aim, of bringingth is important medicine to individuals living with schizophrenia. With over 1900 individuals exposed to lumateperone in 20 clinical trials we believe our schizophrenia clinical development program provides strong evidence of the efficacy and favorable safety profile of lumateperone for the treatment of schizophrenia.

Later this quarter we plan to present results from the second part of our lumateperone open label safety switching study in patients with stable symptoms of schizophrenia. This study is designed to examine the safety of lumateperone in stable patients when switched from other antipsychotics and follows for up to one year. To remind you, this study is conducted in an outpatient real world setting and closely resembles current clinical practice.

We have previously presented positive results from the first part of this study which included 302 patients who were switched from standard of care antipsychotics to a six-week treatment duration with lumateperone followed by a two-week period in which they were switched back to standard of care. In that study lumateperone exhibited a favorable safety profile in stable patients who were switched from other antipsychotic medication.

Statistically significant improvements from standard of care were observed in body weight, cardio metabolic and endocrine parameters. These parameters worsened again when patients were switched back to standard of care medication. Additionally, treatment with lumateperone was not associated with the motor, metabolic or cardiovascular disturbances often associated with other antipsychotic medications. It is notable that symptoms of schizophrenia did not worsen upon switch to lumateperone from standard of care, rather statistically significant improvement from baseline was observed in the positive and negative syndrome scale or PANS mean total score.

As we prepare for the commercialization of lumateperone and further advance our pipeline we continue to build our infrastructure and expand our senior leadership team. To lead the commercialization of lumateperone, Mark Neumann has recently joined as Executive Vice President Chief Commercial Officer. He has extensive marketing and sales experience in categories and areas that match our therapeutic indications.

On the clinical side led by Dr. Andrew Satlin, our Chief Medical Officer; Dr. Suresh Durgam joined as Senior Vice President Late Stage Clinical Development and Medical Affairs; and Dr. Michael Olchaskey joined as Senior Vice President and Head of Regulatory Affairs. They both have significant clinical and regulatory experience in CNS development including with respect to a recently approved oral antipsychotic.

They complement our strong clinical teams which includes Senior Vice President, Dr. Kim Vanover. As a result of the growth of our company, Kim who has been leading our clinical development efforts for over a decade is now overseeing translational medicine and early stage clinical development.

Beyond schizophrenia, we continue to advance in our other lumateperone programs including bipolar depression, agitation in patients with dementia, and depressive disorders. Our bipolar depression program consists of two monotherapy studies and one adjunctive study. We have completed patient enrollment in our first monotherapy study, study 401 conducted in the United States and we expect to complete patient enrollment in our second monotherapy study, study 404 conducted globally in Q1 2019.

Given the relative timing of the completion of study 401 and study 404 and to avoid introducing potential expectation bias in the ongoing 404 trial we anticipate unlocking, analyzing and reporting topline results from these two studies simultaneously in Q2 2019. Expectation bias is a well-documented challenge in clinical trial conduct in which the reporting of positive results from one study influences the outcome of an ongoing study by increasing overall response rates including those of patients on placebo.

The decision to report both bipolar depression trials concurrently has the aim of mitigating this effect on placebo response. Subject to the outcome of these two trials we expect to submit for FDA regulatory approval for bipolar depression in the second half of 2019. In addition to the lumateperone bipolar depression program, we continue to make progress in our Phase 3 clinical trial in patients with agitation associated with dementia, including Alzheimer's disease, for which we expect to conduct an interim analysis later this year.

The objective of the interim analysis is to evaluate our assumptions regarding variability of response and effect size. Following the interim analysis we should be able to make determinations that could include dropping the study, continuing as planned or adjusting the sample size. We have made substantial progress with ITI-214 our selective phosphodiesterase 1 or PDE1 inhibitor.

I will turn the call over to Andy to further elaborate on the exciting results of our study in patients with Parkinson's disease and to comment on our ongoing program in congestive heart failure. Andy?

[Andrew Satlin]

Thanks Sharon. As Sharon said, we recently presented topline results from our Phase 1/2 randomized, double-blind, placebo controlled, multiple ascending dose clinical trial to evaluate ITI-214, our PDE1 inhibitor in patients with Parkinson's disease. The primary objective of our study was to evaluate the safety and tolerability of ITI-214 in patients with mild-to-moderate Parkinson's disease maintained on stable concomitant medication. For example dopamine replacement therapies and to explore the potential for ITI-214 to treat both motor and non-motor symptoms associated with Parkinson's disease.

Topline results demonstrated that ITI-214 was generally well-tolerated with a favorable safety profile with no serious adverse events reported and without promoting or worsening motor complications. These favorable safety results were seen across a broad range of doses from 1 mg and 90 mg. No clinically significant effects of ITI-214 were observed on vital signs or cardiovascular or laboratory parameters compared to placebo.

Patients entered the trial with differences in both the severity of the disease and the presence and severity of dyskinesias. In this context we are encouraged by the improvements in motor symptoms and reductions in dyskinesias seen in this trial. Several patients experienced profound improvements in motor impairment while taking ITI-214 only to have these improvements disappear after cessation of ITI-214 treatment.

The efficacy of ITI-214 in improving motor symptoms of Parkinson's disease was demonstrated on multiple scales providing input from both patients and site raters. Signals of improved motor performance in the on state by ITI-214 relative to placebo were found on the unified Parkinson's disease rating scale. ITI-214 reduced scores on the UPDRS total scale and two of the subscales, Part 3 which reflects clinician ratings of the motor manifestations of Parkinson's disease and Part 4 which assesses motor complications including dyskinesias.

In addition, ITI-214 reduced dyskinesia symptoms as measured by the Unified Dyskinesia Rating Scale and increased total on time and on time without dyskinesias as rated by patients using the Hauser Patient Motor Diary. We will present additional results of this study at future meetings.

We are very encouraged by the results of this trial which translate findings from our preclinical studies to a clinical population and provide us with important information to continue the development of ITI-214 for the treatment of Parkinson's disease. We plan to advance this program with a Phase 2 clinical trial of ITI-214 for the treatment of Parkinson's next year.

As you know, we also have an ongoing program to evaluate the potential of ITI-214 for the treatment of heart failure. Our ongoing clinical trial aims to determine whether the cardiac effects seen in preclinical models translate to patients. Of note, we are pleased that an article by Hashimoto et al in the October 30, 2018 print addition of the Journal Circulation with an accompanying editorial highlights the inhibition of phosphodiesterase 1 by ITI-214 as a novel approach for the treatment of heart failure based on positive results in preclinical models.

I will now turn the call back to Sharon.

[Sharon Mates, Chairman and Chief Executive Officer]

Thanks Andy. In summary, we have completed our NDA submission and continue to make progress in our preparation for commercializing lumateperone. We continue to advance our pipeline which includes our lumateperone programs and bipolar depression, agitation in patients with dementia, and depressive disorders, as well as ITI-214 and ITI-333.

Lastly, we ended the quarter with $376 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 third quarter.

[Lawrence Hineline, Vice President and Chief Financial Officer]

Thanks Sharon. I will be reviewing our financial results for the third quarter ended September 30, 2018. The net loss for the third quarter of 2018 was $41.5 million compared with a net loss of $22.9 million for the third quarter of 2017. Basic and diluted net loss was $0.76 per share for the third quarter of 2018 compared to a basic and diluted net loss of $0.53 per share for the same period in 2017.

Research and development expenses for the third quarter of 2018 were $35.4 million compared to $18.5 million for the third quarter of 2017. This increase is due primarily to increases of approximately $7.3 million of lumateperone clinical cost, $2 million of costs for lumateperone nonclinical efforts, $2.6 million of manufacturing expense, $1.1 million of stock compensation expense, and $4 million of costs related to other projects and overhead expenses.

General and administrative expenses for the third quarter of 2018 were $8 million compared to $5.3 million for 2017. The comparative increase is primarily due to labor, stock compensation, and pre-commercialization expenses. Cash, cash equivalents, and investment securities totaled $376 million at September 30, 2018 compared to $464.3 million at December 31, 2017.

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 Jessica Fye with JPMorgan. Your line is now open.

[Jessica Fye, JPMorgan]

Great, thanks for taking my questions. A couple from me, will you announce acceptance of the lumateperone filing and did you request priority review?

[Sharon Mates, Chairman and Chief Executive Officer]

Hi Jessica, thanks for the question. This is Sharon. And we hope to be able to announce the acceptance of the filing of our NDA and yes, we did ask for priority review. As you know we had fast-track designation and that allowed us to ask for priority review.

[Jessica Fye, JPMorgan]

Okay, great. And then just a couple more on the label extension opportunities, are you still expecting to begin a late-stage clinical on depressive disorders by year-end? And can you help us think about timing for the adjunct bipolar data, should we think about it as also coming in 2019 with the monotherapy studies?

[Sharon Mates, Chairman and Chief Executive Officer]

I'll answer the first part and then if, I think we were pretty specific of what we said about the bipolar studies, but I'll mention that again and then if Andy wants to add anything he can. Just tell me the first question again. Oh got it, the label expansion on depressive. So we started our program in depressive disorders and we will be telling you more about that program before the end of the year and into next year as well.

And then on the bipolar depression, yes I think we've said that we will be announcing those results in the second quarter of next year. Andy, do you…

[Jessica Fye, JPMorgan]

Just to clarify I think, was there a third bipolar depression study that was adjunctive and when should we think about that one?

[Sharon Mates, Chairman and Chief Executive Officer]

Oh, right, I'll ask Andy to answer that one.

[Andrew Satlin]

Yes, so we do have an ongoing study lumateperone in bipolar depression in patients who are on adjunctive therapy with stabilizers with [indiscernible]. That study is ongoing. As you know we've expanded the study to be a global study and we're assessing the pace of the recruitment now and we'll have further information about that in the future.

[Jessica Fye, JPMorgan]

Great, thanks for taking my questions.

[Operator]

Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is now open.

[Unidentified Analyst]

Hey guys, this is Owen on for Brain. Thanks for taking the question. Just a few real quick ones for you, again on the bipolar studies for 2Q 2019 now, I'm just wondering if there was anything specific that may have changed your view on the expectation bias affecting the data release given that it looks like the enrollment aspects of the timelines are intact? And just to follow that up, is that going to change how you present the data at all in terms of maybe pooling analyses between the two studies? Thanks.

[Andrew Satlin]

Yes, so thanks good question. You are right that the timing of the two trials is intact and as that became even clearer recently it made sense to us to consider this approach in order to as Sharon mentioned to minimize the expectation bias. So given the fact that there is a relative proximity between the completion of the two trials in that it's not too close and it's not too far, it makes sense to take this approach to reduce that expectation, in order to reduce the expectation bias.

So what we're going to be doing is, completing the clinical portion of the monotherapy study as we've already indicated and we'll only be reporting on the two trials once the second trial is complete. This doesn't say anything more about how we might analyze the data there.

[Unidentified Analyst]

Okay great, thank you.

[Operator]

Our next question comes from Charles Duncan with Cantor Fitzgerald. Your line is now open.

[Charles Duncan, Cantor Fitzgerald]

Hey guys, Sharon, congrats on the progress, thanks for taking my questions. First question may be hard to answer, but I'm going to ask it anyway and that is that we recently witnessed two days of the cycle from ADCOM meeting and the first day was different than the second day and I guess I'm wondering if you are expecting and preparing for an ADCOM and if you could point out one or two elements that you would cite as being very different from the lumateperone program in schizophrenia from at least the experience of the first day besides the clinical profile of the drug?

[Sharon Mates, Chairman and Chief Executive Officer]

Thanks for the question Charles. I'll start and then I'll ask if Kim or Andy wants to add anything. So first to start, I think it's very exciting that we have medicines with novel mechanisms addressing CNS disorders and while there can be no ups and downs et cetera, I think that let's not lose sight of the goal here. It is to develop new medicines for the treatment of populations in need of these medicines and it is to bring better medication to patients.

So we think that both of these advisory committees they are seeing novel mechanisms coming forward and we applaud that. As to us specifically, I think as you know it's really up to the FDA whether or not one has an advisory committee meeting. So we'll tell you that we will prepare for an advisory committee meeting and we'll update you as we progress. And when we know you'll know. So to that, if Kim or Andy, you want to add anything?

[Kimberly Vanover, Senior Vice President of Clinical Development]

Sure, hi Charles. So I think with lumateperone just to remind everyone that it's really the safety profile that's highly differentiated here among treatments with schizophrenia and that's what we received fast track designation for, and I think when the FDA will look at our data and the whole package it's really always looking at the benefit risk profile for any new drug and I think that our favorable safety profile will speak loudly here.

[Sharon Mates, Chairman and Chief Executive Officer]

Andy, do you want to add anything or you are okay?

[Andrew Satlin]

No, I think that’s fine. Thanks.

[Sharon Mates, Chairman and Chief Executive Officer]

Okay, great.

[Charles Duncan, Cantor Fitzgerald]

Okay, that's helpful and I agree with you that clearly you're doing something for patients that doesn't appear to be otherwise done for them with lumateperone. And so I'm going to assume not only filing acceptance but approval length and press fast forward button to the go-to-market strategy which is my second question. At this point I'm sure that you're contemplating that, but if you could share with us just a little bit of color on your initial plans and should lumateperone be approved for schizophrenia would you be prepared to launch?

[Sharon Mates, Chairman and Chief Executive Officer]

Thanks Charles. Again, so it's a good question and as you know we announced a couple of weeks ago and I mentioned this morning on the call that Mark Neumann has joined as our Chief Commercial Officer and he's a proven biopharmaceutical executive and he has over 30 years of industry experience between Bristol Myers, Squibb and Amgen and has a strong track record of building high performing commercial teams and successfully executing product launches across a range of therapeutic areas and businesses which includes areas in the neurosciences and in cardiovascular disease.

So he just joined a few weeks ago. We have a little over a year ago now, hired a Head of Commercial Development and she has been laying the groundwork which markets now picked up on and I think that as we go forward, you will hear more about specific plans. But I think we've been doing all of the groundwork laying that we need to be doing now for a successful launch.

[Charles Duncan, Cantor Fitzgerald]

Excellent. Thanks for taking my questions hopping between calls.

[Operator]

Our next question comes from John Sullivan with Leerink Partners. Your line is now open.

[John Sullivan, Leerink Partners]

Thanks so much and thanks for taking the questions. Can I shift gears to ITI-214 for a moment, can you just speak a little bit more about the anecdotal signs of abatement of symptoms of dyskinesia that you saw upon administration of the candidate and abatement - and resumption of those symptoms that you saw in some cases upon the absence of the drug?

[Andrew Satlin]

Yes, thanks. So I can't really provide a lot of detail about that, but the investigators who monitor these patients very closely did report that anecdotally that they saw in patients who had dyskinesia at baseline in some cases they saw really what they report as dramatic decreases in that and perhaps even more telling is that when the drug was discontinued, the patients went back to their previous condition. So we think the signals are fairly strong and that gives us a lot of confidence going forward.

[John Sullivan, Leerink Partners]

Thanks very much. And then just a financial question, can you just comment on the runway created by the cash on hand in your view?

A - Sharon Mates

I think you cut out at the end, if you could repeat the question please?

[John Sullivan, Leerink Partners]

It was just a question about your view of the runway that's created by the company's cash on hand, time runway?

[Lawrence Hineline, Vice President and Chief Financial Officer]

Yes, hi this is Larry Hineline. We are continuing with our guidance that our cash will be available to continue our progress through and into 2020, so that hasn't changed.

[John Sullivan, Leerink Partners]

Thank you.

A - Andrew Satlin

If I could just go back to just clarify my answer as well. So while we - there were certain patients that the investigators told us about specifically, overall we did see reductions in dyskinesia in those patients who had dyskinesia at baseline. This was as measured by the unified dyskinesia rating scale as I mentioned in the remarks earlier, so and it was placebo controlled, so we did see signals there.

[John Sullivan, Leerink Partners]

Thank you.

[Andrew Satlin]

Sure.

[Operator]

And our last question comes from line of Bert Hazlett with BTIG. Your line is now open.

[Robert Hazlett]

Yes, thanks for taking the question. My question is again forward looking with regard to potential launch of lumateperone in schizophrenia and my question is, is manufacturing a gating item for a potential launch there Sharon if you or one of your colleagues could comment on that, the status of manufacturing of lumateperone and what plans you're - that you've made there, that would be terrific? Thanks.

[Sharon Mates, Chairman and Chief Executive Officer]

Hi Bert, thanks for the question. No, manufacturing is not a gating item. We have - manufacturing has gone quite smoothly and we as you know submitted the CMC portion with the NDA and in fact we had our pre-NDA meeting way before the clinical portion, so we don't anticipate manufacturing to be a gating item at all.

[Robert Hazlett]

Okay, thank you for taking the question.

[Operator]

And that concludes today's question-and-answer session. I'd like to turn the call back to Sharon Mates for closing remarks.

[Sharon Mates, Chairman and Chief Executive Officer]

Thanks everyone for participating in today's call and we look forward to further updates for you and further progress from Intra-Cellular Therapies'. And then with that thank you operator and again thank you all for joining the call. You can now disconnect.

[Operator]

Ladies and gentlemen, have a great day.