Intra-Cellular Therapies' (ITCI) CEO Sharon Mates on Q4 2016 Results - Earnings Call Transcript

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Intra-Cellular Therapies Inc. (NASDAQ:ITCI) Q4 2016 Results Earnings Conference Call March 1, 2017 8:30 AM ET

Executives

Juan Sanchez - VP, Corporate Communications and IR

Sharon Mates - Chairman and Chief Executive Officer

Kimberly Vanover - SVP Clinical Development

Larry Hineline - VP and Chief Financial Officer

Cedric O'Gorman - VP Medical Affairs

Michael Halstead - Senior Vice President and General Counsel

Analysts

Adnan Butt - RBC Capital Markets

Robert Hazlett - BTIG.

Operator

Good morning, ladies and gentlemen, and welcome to Intra-Cellular Therapies' Year End 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] 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, Corporate Communications and Investor Relations. Please go ahead.

Juan Sanchez

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 results for the fourth quarter and full year ended December 31, 2016, 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. Kimberly Vanover, Senior Vice President of Clinical Development; Larry Hineline, Vice President and Chief Financial Officer, Dr. Cedric O'Gorman, Vice President of Medical Affairs and Mr. 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 candidate, our clinical and non-clinical plans, our plans to present or report additional data, the anticipated conduct and the source 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 risks and uncertainties that may cause actual results to differ 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 reports. You are cautioned not to place undue reliance on these forward-looking statements and the Company disclaims any obligations to update such statements.

I will now turn the call over to Sharon.

Sharon Mates

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 during 2016 and summarize our plans for 2017. I will start with an update and overview of our development programs for Lumateperone also known as ITI-007 and our PDE-1 inhibitor program.

Larry will then review our financial results and we will open the line for Q&A. In 2016, we continued to advance our Lumateperone program. Lumateperone is in late stage clinical development for the treatment of schizophrenia, bipolar depression and agitation associated with dementia, including Alzheimer's disease. To remind everyone, our Lumateperone schizophrenia program includes three large randomized double blind placebo-controlled trial.

All three fixed dose studies were conducted in the United States in two studies, the efficacy of ITI-007 60 milligrams once daily was demonstrated showing a statistically significant separation from placebo on the primary endpoint, the Positive and Negative Syndrome Scale or PANSS total score.

Additionally, across all three studies, Lumateperone was found to be well tolerated with a safety profile similar to placebo and was devoid of the clinical irrelevant adverse event including movement disorders and metabolic disturbances commonly observed with other anti-psychotic and which can often lead to non-adherence treatment, discontinuation and relapse.

Importantly in the two studies where risperidone was included as an act of control Lumateperone demonstrated a highly differentiated safety and tolerability profile versus risperidone, the most frequently prescribed anti-psychotic for the treatment of Schizophrenia.

In our studies Lumateperone was statistically significantly superior to risperidone on several key safety and tolerability parameters such as triglycerides, cholesterol, glucose, prolactin and weight gain.

We have been excited and encouraged by the response from the scientific and medical community when we have presented these data at medical conference. New research published recently in JAMA Psychiatry by [Indiscernible] discusses the inherent risk which patients with Schizophrenia have for developing Type-2 diabetes again emphasizing the need for improved treatment options that avoid the cardio metabolic issues associated with other drugs.

We believe Lumateperone can address this unmet need. We have a meeting scheduled with the FDA in late March to discuss the submission of our NDA for Lumateperone for the treatment of Schizophrenia. We expect to provide an update on the status of our discussions following this meeting.

We also had a positive pre NDA meeting with the FDA regarding the chemistry manufacturing and controls, CMC data package. Additionally, we have signed a long term agreement with a third party manufacturer for the supply of Lumateperone in commercial quantities. We believe that the Lumateperone late stage clinical development program which includes two positive large, well controlled studies and supportive data from a third study collectively provide evidence for the efficacy and safety of Lumateperone for the treatment of Schizophrenia.

Turning to our Lumateperone bipolar depression, clinical development program, clinical conduct is ongoing. Currently, our program consists of two phase 3 clinical trials conducted in the United States. We continue to employ a number of strategies designed to ensure we recruit appropriately diagnosed patients in an effort to reduce the risk of a high placebo response.

Patient enrolment in our Phase 3 bipolar depression mono therapy study or Study 401, is anticipated to complete in the first half of 2018. Patient enrolment in our Phase 3 bipolar depression adjunctive study, or Study 402, is anticipated to complete in the second half of 2018.

One of our strategies to optimize potential success in this program is to initiate a third trial in bipolar depression conducted globally. We anticipate patient enrolment in our global study to complete by the end of 2018.

Bipolar disorder affects approximately 2.6% or 5.7 million adults in the U.S. according to the National Institute of Mental Health. Bipolar depression represents the most common clinical manifestation of bipolar disorder and is associated with worse prognosis than bipolar mania.

There are few approved therapies for the treatment of bipolar depression and those that are approved have clinically relevant limitation in terms of safety and tolerability. We believe Lumateperone has the potential to serve a broad patient population suffering from depressive episodes associated with bipolar disorder.

Our Lumateperone Phase 3 development program for the treatment of agitation in patients with dementia including Alzheimer’s disease is ongoing.

Swift resolution of symptoms of agitation and aggression in this patient population is important. In schizophrenia, Lumateperone has been shown to rapidly reduce symptoms within the first week of treatment with no dose titration needed. We believe this rapid action will also be reflected in the reduction of agitation and aggression associated with dementia.

Importantly, there are no treatments currently approved for the treatment of agitation and aggression in this patient population. Currently, medications are being prescribed off-label to manage these behavioral symptoms. These medications are frequently ineffective and are associated with deleterious side-effects including those leading to falls and fractures and increased mortality.

Behavioral disturbances are the leading cause of institutionalization in these patients. We believe that low dose Lumateperone is uniquely positioned to address this unmet need for the favorable safety and tolerability profile and provide relief of a broad array of behavioral symptoms associated with dementia. Our goal is to reduce the significant and costly burden on patients, care givers and families by delaying or preventing nursing home placements.

Lumateperone as a first-in-class molecule acting synergistically by a serotonogic, dopaminogic and glutamatergic, represents a new therapeutic approach for neuropsychiatric disorders.

We have continued to investigate the unique mechanism of action of Lumateperone and exciting new data supports the rapid onset of any depression effect in addition to the previously described rapid reduction in symptoms of psychosis in patients with schizophrenia.

Recent data generated through a collaboration we have with Karolinska [ph] Institute demonstrate that Lumateperone indirectly enhances glutamate NMDA an -- receptor mediated neurotransmission through activation of D1 receptor. The clinical benefit arising from there is the potential for a rapid onset of anti depressant effect as a single standalone treatment with what we believe to be an unprecedented safety profile.

We are delighted to have been invited to present these data at a special symposium of the International College of Neuropsychopharmacology CINP in Europe in July on the potential therapeutic world of Lumaterperone in treatment resistant depression.

We believe these data form a foundation of the unique mechanism of action supporting Lumateperone for the treatment of bipolar depression, treatment resistant depression and other depressive disorders.

We will be presenting these and additional data on our programs at several upcoming scientific and medical conferences including, the International Congress on Schizophrenia Research (ICOSR), the Society of Biological Psychiatry (SOBP), the American Psychiatric Association (NYSE:APA), the International Society for Bipolar Disorders (ISBD) and the International College of Neuropsychopharmacology (CINP).

Within our ITI-007 [ph] portfolio, we continue to advance our ITI-007 long-acting injectable program to provide additional treatment options to patients. The highly differentiated safety and tolerability data to-date with Lumateperone suggest that a long-acting injectable option may lend itself to being an important formulation choice for some patients and we expect to enter clinical development in 2018.

As we discussed on our last quarterly call, we have been advancing our PDE 1 program which has broad potential for the treatment of CNS and non-CNS disorders including cardiovascular disease.

Our lead molecule, ITI-214 has been found to be safe and well-tolerated in four phase 1 clinical trials in healthy volunteers as well as patients with schizophrenia.

We are now initiating a program with ITI-214 in patients with Parkinson’s disease. PDE1 enzymes are highly active in pathological or disease state and our PDE1 inhibitors are designed to re-establish normal function in these disease state.

PDE1 inhibitors have minimal effect on normal function making this an exciting and novel approach for the treatment of the disease. In the first half of this year, we plan to initiate a Phase 1/2 clinical trial in patients with Parkinson's disease to evaluate safety and tolerability in this patient population.

Recent preclinical studies suggest that PDE1 inhibitors, potentiate L-DOPA and other dopamine replacement therapies for better motor symptom control for inhibiting the adverse dyskinesia induced by these treatment.

Pre clinical models have also shown the potential for PDE1 inhibitors to address non-motor symptoms such as excessive daytime sleepiness, cognitive impairment and other non-motor symptoms.

In addition to establishing the safety and tolerability of ITI-214 in this patient population, we will also evaluate motor and non-motor exploratory endpoint. This novel approach to improved control of motor symptoms without dyskinesia, while offering non-motor symptom benefit would be a major breakthrough in Parkinson’s disease treatment.

Finally, we ended the quarter with $384.1 million in cash and investment placing us in a very strong position to advance our research and development program. I will now turn the call over to Larry, who will review the financial results for the fourth quarter and full year.

Larry Hineline

Thanks, Sharon. I will be reviewing our financial results for both fourth quarter and year ending December 31, 2016, and provide an overview of our expectations for the use of our cash and investments.

The net loss for the fourth quarter of 2016 was $27.5 million, compared with a net loss of $28.8 million for the fourth quarter of 2015. Basic and diluted net loss was $0.64 per share for the fourth quarter of 2016, compared to a basic and diluted net loss of $0.67 per share for the same period in 2015.

For the full year of 2016, the net loss was $116.4 million or $2.69 per share compared with a net loss of $104.8 million or $2.91 per share basic and diluted for the same period in 2015. Research and development expenses for the fourth quarter of 2016 were $21.2 million, and for the full year were $93.8 million compared to $22.9 million for the fourth quarter of 2015 and $87.7 million for the full year of 2015.

The decrease for the quarter is primarily due to lower cost associated with the completion of the second phase III clinical trial for Lumateperone in patients with schizophrenia completed in the third quarter of 2016, offset in part by the Phase 3 clinical trials of Lumateperone in bipolar depression and agitation in dementia including Alzheimer’s disease and other clinical trials and increased manufacturing cost for Lumateperone.

The increase for the year is primarily due to an increase in manufacturing and labor related cost offset in part by lower clinical trials related to cost. There were decreased cost in 2016 for the first Phase 3 clinical trial for Lumateperone in patients with schizophrenia that was completed in 2015.

These costs were offset primarily by increased cost for the second phase 3 clinical trial for Lumateperone in patients with schizophrenia completed in the third quarter of 2016 along with the Phase 3 clinical trials of Lumateperone and bipolar depression and agitation in dementia including Alzheimer's disease and the other clinical trials.

General and administrative expenses for the fourth quarter and year end 2016 were $7.0 million and $24.8 million respectively compared to $6.5 million and $18.2 million for the prior year periods.

The increase in both periods is primarily the result of higher stock-based compensation expense and to a lesser extent, professional fees, pre-commercialization activities and increased salaries. Cash and investments totaled $384.1 million at year-end 2016 compared to $475.2 million at December 31, 2015.

We expect that existing cash and investments of $384.1 million will be dedicated primarily to the Lumateperone development program including to fund clinical trials of Lumateperone and bipolar depression behavioral disturbances in patients 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 if Lumateperone receives regulatory approval, initial commercialization efforts; to fund preclinical and clinical development of the company's ITI 007 long-acting injectable program and to fund non-clinical activities including the continuation of manufacturing activities in connection with the development of Lumateperone. Funds will also be used for other clinical and preclinical programs including the company's PDE development activities.

With that operator, could you please open the line for questions?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Adnan Butt of RBC Capital Markets. Your line is now open.

Adnan Butt

Hey, thanks for taking the question. Sharon, on Lumateperone, in terms -- in schizophrenia, in terms of sequence of meetings, is that established by the FDA or by the company? I would have imagined that a discussion on the clinical portion would precede anything else, but I could be wrong there. And then secondly on ITI 214, in your view the way it works is it more likely to impact motor or non-motor symptoms, and what states PD patients will you enrol?

Sharon Mates

Great. Thanks Adnan. Hi. So I think you asked two questions and I can ask Kim to go ahead and address them.

Kimberly Vanover

Thank you, Adnan. So, from the sequence of meetings we have separate meetings for the CMC regulatory discussions with the FDA and for other meetings related to the submission of the NDA for schizophrenia. And then, I think you had another question…

Adnan Butt

Kim, on 214 if you think it's going to work more on motor or non-motor symptoms and what stage PDE patients?

Kimberly Vanover

Right. So, we’re really excited to be able to move the PDE 1 program forward in Parkinson’s disease and we think there’s an opportunity here to address both the motor and the non-motor symptoms and really have a broad control of different symptoms that could be used in both early and late stage Parkinson’s disease perhaps early stage in early control as a monotherapy events, for motor control and then dose sparing for L-DOPA as it would enhance the motor control of L-DOPA and other dopaminergic treatment.

In addition to that non-motor potentials really may come from the ability to reduce excessive daytime sleepiness and enhance pagination and we have strong pre-clinical data to support moving forward across the broad range of symptoms.

Adnan Butt

Okay. Kim thanks. And then back to the FDA meeting schedule. Have you had any meetings with the FDA at all regarding the cynical portions or March would be first one?

Sharon Mates

So, we have lots of meetings all the time with the FDA. So, we have our latest meeting is scheduled for the end of March and that’s the meeting that we’ve all been waiting for and taking about in past.

Adnan Butt

Okay. Thanks Sharon.

Operator

Thank you. And our next question comes from Seamus Fernandez with Leerink Partners. Your line is now open.

Unidentified Analyst

Hi. Good morning. This is [Indiscernible] behalf of Seamus. Thanks for taking my question. I just have a one, quick one. Could you comment on the patient recruitment and timeline for the bipolar depression study? I just want to get a sense of what kind of – if any additional measures you guys have put in to reduce the placebo effects and how does that play the role in terms of the timeline for the clinical trials? Thank you.

Sharon Mates

Great. Thanks. And again, I’ll ask Kim to address that one.

Kimberly Vanover

Thank you. I think that’s a good question and we are implementing different strategies in the bipolar program in order to try to reduce the risk of the placebo response. These include measures -- we try to ensure the appropriate patient diagnosis and ensure the appropriate severity of illness. And we think we have put in the appropriate measures that we continue in this program.

Sharon Mates

So just clarify little bit. We started the program doing that as well.

Kimberly Vanover

Well, absolutely.

Sharon Mates

And we just have now gone and look back and looked at the program and its entirety and we think that we been doing a good job, but have reinforce what we’re doing in the program.

Unidentified Analyst

And so, in terms of the program and timeline everything is still on track as you expected when you start the trial or is there acceleration or deceleration, just want a color on how, when and how we should be expecting the top-line data? Thank you.

Kimberly Vanover

Right. So we’ve provided additional guidance on the timing of the bipolar programs this morning. We have said that the patient enrolment in the monotherapy study, the 401 study is expected to complete in the first half of 2018. The patient enrolment for the adjunctive study in bipolar depression or 402 study is expected to complete in the second half of 2018, and as part of our overall program we are initiating a third trial globally, that we also anticipate, would complete by the end of 2018.

Unidentified Analyst

Okay. Thank you.

Operator

Thank you. And our next question comes from the line of Ritu Baral of Cowen. Your line is now open.

Unidentified Analyst

Hi. This is Alex on for Ritu. I’d like to just follow on the PDE program. Could you specify any details at all on to the non-motor endpoints that you’re looking at, is it just going to be cognition in sleepiness or we going to see anything in mood?

Kimberly Vanover

So, we’ll provide additional details on the study design when we post them on clinicaltrials.gov, what we can say is from the preclinical data that we have on the PDE 1 program. We do see that the PDE 1 inhibitors decrease excessive daytime sleepiness or increased wakefulness without being a stimulant. So this is non-stimulant approach that very novel in and for this treatment of some of the non-motor symptoms.

We also have the preclinical data in the animal models that show improved cognition that we believe can apply to. Parkinson’s disease is one of the non-motor symptoms and also can apply to other disorders including dementia and other cognitive disorders. And we have of course the strong data on the potentiation of L-DOPA in the Parkinson’s motor model as well. And we’ll be looking at a variety of non-motor symptoms in the study shown.

Sharon Mates

Right. Thanks, Kim. We will look at other e exploratory, but please remember this is primarily a safety and tolerability study with exploratory endpoints some which Kim mentioned.

Unidentified Analyst

Got it. Thanks. And then, just another follow-up on the bipolar programs, if you could give us anymore details on this third global study territories, adjunct monotherapy anything, that would be great? Thanks.

Kimberly Vanover

Yes. We will provide you with more details when we post it. I think right now, I think we’ve given you the guidance that we’re going to be doing this study and I think as soon as we post this we’d be happy to give you more details.

Unidentified Analyst

Great. Thanks for taking my questions.

Operator

Thank you. And our next question comes from Charles Duncan of Piper Jaffray. Your line is now open.

Unidentified Analyst

Good morning. This is Sera [ph] on for Charles. So thanks for the added details today. I had two questions. First, so you’ll go to the FDA in late March and can you help us to understand what fast-forward you’ll propose to them at that time for the schizophrenia program?

Sharon Mates

No. We’ve given now the guidance that we’re going to the FDA in late March, and that this is a meeting to discuss the submission of NDA for Lumateperone for the treatment of schizophrenia. I think that, it would be prudent for us to try to guess to say any more at this point, but rather to have the meeting and then come back to you and update you.

Unidentified Analyst

Okay. Thanks. And just one more on the bipolar depression, Can you provide us some more color on why you’ve chosen to initiate a third Phase 3 and how that may complement the U.S. program?

Kimberly Vanover

Thanks Sera, this is Kim. And we really wanted to be able to take this program globally and extend our overall program. We think it's prudent to be able to start a third study that we believe will optimize our overall success in the program.

Unidentified Analyst

Great. Thank you.

Operator

Thank you. [Operator Instructions] And our next question comes from Robert Hazlett of BTIG. Your line is now open.

Robert Hazlett

Thanks for taking the question. I appreciate the updates. I believe the bipolar discussion was just commented on, but in terms of the interactions with FDA is this -- could you just frame the potential likely outcomes as you walk through the discussion in March? And then just secondly, is there a notion that you really want to focus on the risk benefit with Lumateperone, given that the benign adverse event profile in the context of the efficacy that's been seen there? Just a little more color on kind of potential outcomes. And then you’re positioning of the molecule as you talk with the agency in March? Thanks.

Sharon Mates

Hi, Bert. I think we actually just answered the questions you were asking.

Robert Hazlett

Sorry.

Sharon Mates

Yes. Maybe you won’t able to be on for it and what we said is that we’ll provide you further guidance and then update once we have the meeting with the FDA.

Robert Hazlett

So, can you comment on the risk benefit side, did you comment on that at all?

Sharon Mates

Well, we have an unprecedented safety profile we believe in human’s one or two.

Kimberly Vanover

Right. Sol, we believe we have two positive studies of Lumateperone for the treatment of schizophrenia and Lumateperone has shown to be well tolerated with the safety profile similar to placebo and has shown advantages in the clinical trial over the risperidone which we’ve previously discussed for our clinical program.

Robert Hazlett

And then, just you touched on this with the prior question or two, but could you talk about the strategy behind the third study in bipolar. Is this due to a specific interaction with the regulatory body in the EU perhaps or is that third study why now and why strategically you feel you need it?

Kimberly Vanover

We believe it’s prudent to start a third study in the program while we continue to implement the procedures in our current ongoing studies in order to reduce the risk of placebo response. We wanted to go ahead and start our program and expand that globally and to be able to start this third program.

Robert Hazlett

Okay. Thank you very much.

Operator

Thank you. And I’m showing no further questions at this time. I would like to turn the conference back over to Dr. Sharon Mates for closing remarks.

Sharon Mates

So with that, we thank you for joining our call today and we look forward to providing further updates to you on our programs. Operator, you can now disconnect.

Operator

Ladies and gentlemen, thank you for participating in todays’ conference. This does conclude the program and you may all disconnect. Have a great day everyone.

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