You should read the following in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto that appear elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed onFebruary 25, 2021 . In addition to historical information, the following discussion and analysis includes forward-looking information that involves risks, uncertainties and assumptions. Our actual results and the timing of events could differ materially from those anticipated by these forward-looking statements as a result of many factors, including those discussed under "Risk Factors" in our Annual Report on Form 10-K filed onFebruary 25, 2021 , as updated from time to time in our subsequent periodic and current reports filed with theSEC . Overview We are a biopharmaceutical company focused on the discovery, clinical development and commercialization of innovative, small molecule drugs that address underserved medical needs primarily in neuropsychiatric and neurological disorders by targeting intracellular signaling mechanisms within the central nervous system, or CNS. InDecember 2019 , CAPLYTA (lumateperone) was approved by the FDA for the treatment of schizophrenia in adults (42mg/day) and we initiated the commercial launch of CAPLYTA in lateMarch 2020 . In support of our commercialization efforts, we employ a national salesforce. As used in this report, "CAPLYTA" refers to lumateperone approved by the FDA for the treatment of schizophrenia in adults, and "lumateperone" refers to, where applicable, CAPLYTA as well as lumateperone for the treatment of indications beyond schizophrenia. Lumateperone is in Phase 3 clinical development as a novel treatment for bipolar depression. Our lumateperone bipolar depression clinical program consists of three monotherapy studies and one adjunctive study. InSeptember 2020 , we announced positive topline results from Study 402, conducted globally, evaluating lumateperone as adjunctive therapy to lithium or valproate in the treatment of major depressive episodes associated with Bipolar I or Bipolar II disorder. In Study 402, once daily lumateperone 42 mg met the primary endpoint for improvement in depression as measured by change from baseline versus placebo on the Montgomery-Åsberg Depression Rating Scale, or MADRS, total score (p=0.0206; effect size = 0.27). Lumateperone 42 mg also met the key secondary endpoint, the Clinical Global Impression Scale for Bipolar for Severity of Illness, or CGI-BP-S, Depression Score (p=0.0082; effect size = 0.31). The lower lumateperone dose, 28 mg, showed a trend for a dose-related improvement in symptoms of depression but the results did not reach statistical significance. In the first quarter of 2020, we initiated our third monotherapy Phase 3 study, Study 403, evaluating lumateperone as monotherapy in the treatment of major depressive episodes associated with Bipolar I or Bipolar II disorder. Following the positive results in Study 402, we amended Study 403 to evaluate major depressive episodes with mixed features in bipolar disorder in patients with Bipolar I or Bipolar II disorder and mixed features in patients with major depressive disorder, or MDD. We expect to complete Study 403 in the second half of 2022 and following completion we intend to discuss the results with the FDA to determine whether Study 403, as amended, will provide supportive data for a potential future regulatory filing for this indication. InJuly 2019 , we announced topline results from our first monotherapy study, Study 401, conducted inthe United States , and our second monotherapy study, Study 404, conducted globally, evaluating lumateperone as monotherapy in the treatment of major depressive episodes associated with Bipolar I or Bipolar II disorder. In Study 404, lumateperone 42 mg met the primary endpoint for improvement in depression as measured by change from baseline versus placebo on the MADRS total score (p<0.0001; effect size = 0.56). These benefits were statistically significant in both Bipolar I and Bipolar II patients. Study 404 also met its key secondary endpoint, Clinical Global Impression Scale for Bipolar for Severity of Illness (CGI-BP-S) Total Score (p<0.001; effect size = 0.46). Study 401 tested two doses of lumateperone, 42 mg and 28mg along with placebo. In this trial, neither dose of lumateperone met the primary endpoint of statistical separation from placebo as measured by change from baseline on the MADRS total score. There was a high placebo response in this trial. Lumateperone was generally well-tolerated in all three bipolar depression studies, with a favorable safety profile. In addition, while our Phase 3 bipolar depression trials were powered for the overall patient population and not powered for subpopulation analyses, statistically significant benefit versus placebo was seen in the subgroup of patients with Bipolar I and Bipolar II disorder in Study 404 and in patients with Bipolar I disorder in Study 402, but the Bipolar II subgroup was not statistically significant in Study 402. InFebruary 2021 , we submitted supplemental new drug applications, or sNDAs, to the FDA for potential regulatory approval of lumateperone for the treatment of bipolar depression in patients with Bipolar I or II disorder as monotherapy and adjunctive therapy. InMay 2021 , we announced that the FDA had accepted the sNDAs for review and assigned a Prescription Drug User Fee Act (PDUFA) target action date ofDecember 17, 2021 for these applications. In support of the potential commercial launch of lumateperone for the treatment of bipolar depression upon approval, we have substantially completed the expansion of our sales force from approximately 240 sales representatives to approximately 320 sales representatives. 23 -------------------------------------------------------------------------------- Table of Contents We are also pursuing clinical development of lumateperone for the treatment of additional CNS diseases and disorders. At a dose of 42 mg, lumateperone has been shown effective in treating the symptoms associated with schizophrenia, and we believe lumateperone may represent a potential treatment for mood disorders including MDD, post-traumatic stress disorder and intermittent explosive disorder. Patient enrollment in Study 501 and Study 502, our global Phase 3 clinical trials evaluating lumateperone 42 mg as an adjunctive therapy to antidepressants for the treatment of MDD has commenced. We expect to file an sNDA with the FDA for approval of lumateperone as an adjunctive therapy to antidepressants for the treatment of MDD in 2024. We have also initiated a Phase 3 study evaluating lumateperone for the prevention of relapse in patients with schizophrenia. The study is being conducted in five phases consisting of a screening phase, a 6-week, open-label run-in phase during which all patients will receive 42 mg of lumateperone per day, a 12-week, open-label stabilization phase during which all patients will receive 42 mg of lumateperone per day; a double-blind treatment phase 26 weeks in duration during which patients receive either 42 mg of lumateperone per day or placebo (1:1 ratio) and a 2-week safety follow-up phase. This study is being conducted in accordance with our post approval marketing commitment to the FDA in connection with the approval of CAPLTYA for the treatment of schizophrenia as is typical for antipsychotics. Within the lumateperone portfolio, we are also developing a long-acting injectable formulation to provide more treatment options to patients suffering from mental illness. We have completed the preclinical development of a long-acting injectable formulation and inDecember 2020 we initiated a Phase 1 single ascending dose study of lumateperone LAI, a formulation of lumateperone designed to be administered subcutaneously and to maintain therapeutic levels of lumateperone for at least one month. This study will evaluate the pharmacokinetics, safety and tolerability of lumateperone LAI in patients with stable symptoms of schizophrenia. We anticipate we will complete this study in the second half of 2021. Results from this study will inform the dosing strategy for future studies. We are evaluating several additional formulations of the lumateperone LAI with treatment durations of one month and longer. Given the encouraging tolerability data to date with oral lumateperone, we believe that a long-acting injectable option, in particular, may lend itself to being an important formulation choice for certain patients.
We are developing
ITI-1284-ODT-SL
for the treatment of behavioral disturbances in patients with dementia, the treatment of dementia-related psychosis and for the treatment of certain depressive disorders, in the elderly.
ITI-1284-ODT-SL
is a deuterated form of lumateperone, a new molecular entity formulated as an oral disintegrating tablet for sublingual administration.
ITI-1284-ODT-SL
is formulated as an oral solid dosage form that dissolves almost instantly when placed under the tongue, allowing for ease of use in the elderly and may be particularly beneficial for patients who have difficulty swallowing conventional tablets. Phase 1 single and multiple ascending dose studies in healthy volunteers and healthy elderly volunteers (> than 65 years of age) evaluated the safety, tolerability and pharmacokinetics of
ITI-1284-ODT-SL.
In these studies, there were no reported serious adverse events in either age group. In the elderly cohort, reported adverse events were infrequent with the most common adverse event being transient dry mouth (mild). Based on these results, we have initiated our program evaluating
ITI-1284-ODT-SL
for the treatment of agitation in patients with probable Alzheimer's disease. Clinical conduct in this program is expected to commence early in 2022. Additional studies in dementia-related psychosis, and certain depressive disorders in the elderly are planned for the first half of 2022. We have another major program called ITI-002 that has yielded a portfolio of compounds that selectively inhibit the enzyme phosphodiesterase type 1, or PDE1. PDE1 enzymes are highly active in multiple disease states and our PDE1 inhibitors are designed to reestablish normal function in these disease states. Abnormal PDE1 activity is associated with cellular proliferation and activation of inflammatory cells. Our PDE1 inhibitors ameliorate both of these effects in animal models. We intend to pursue the development of our phosphodiesterase, or PDE, program, for the treatment of aberrant immune system activation in several CNS and non-CNS conditions with a focus on diseases where excessive PDE1 activity has been demonstrated and increased inflammation is an important contributor to disease pathogenesis. Our potential disease targets include heart failure, immune system regulation, neurodegenerative diseases, cancers and other non-CNS disorders. ITI-214 is our lead compound in this program. Following the favorable safety and tolerability results in our Phase 1 program, we initiated our development program for ITI-214 for Parkinson's disease and commenced patient enrollment in the third quarter of 2017 in a Phase 1/2 clinical trial of ITI-214 in patients with Parkinson's disease to evaluate safety and tolerability in this patient population, as well as motor and non-motor exploratory endpoints. In the fourth quarter of 2018, we announced that the Phase 1/2 clinical trial of ITI-214 has been completed and topline results demonstrated ITI-214 was generally well-tolerated with a favorable safety profile and clinical signs consistent with improvements in motor symptoms and dyskinesias. We have initiated our Phase 2 clinical program with ITI-214 for Parkinson's disease and expect to commence patient enrollment in the first half of 2022. In addition, in the second quarter of 2020, we announced topline results from Study ITI-214-104, a Phase 1/2 translational study of single ascending doses of ITI-214 in patients with chronic systolic heart failure with reduced ejection fraction. In this study, ITI-214 improved cardiac output by increasing heart contractility and decreasing vascular resistance. Agents that both increase heart contractility (inotropism) and decrease vascular resistance (vasodilation) are called inodilators. Inodilators in current clinical use are associated with the development of arrhythmias, which are abnormal heart rhythms that when serious can impair heart function and lead to mortality. ITI-214, which acts through a novel mechanism of action, was not associated with arrhythmias in this study and was generally well-tolerated in all patients. 24 -------------------------------------------------------------------------------- Table of Contents We also have a development program with our ITI-333 compound as a potential treatment for substance use disorders, pain and psychiatric comorbidities including depression and anxiety. There is a pressing need to develop new drugs to treat opioid addiction and safe, effective, non-addictive treatments to manage pain. ITI-333 is a novel compound that uniquely combines activity as an antagonist at serotonin 5-HT2A receptors and a partial agonist at µ-opioid receptors. These combined actions support the potential utility of ITI-333 in the treatment of opioid use disorder and associated comorbidities (e.g., depression, anxiety, sleep disorders) without opioid-like safety and tolerability concerns. InDecember 2020 , we initiated a Phase 1 single ascending dose study evaluating the safety, tolerability and pharmacokinetics of ITI-333 in healthy volunteers and we anticipate topline results from this study will be available in the fourth quarter of 2021. We have received a grant from theNational Institute on Drug Abuse under the Helping to End Addiction Long-term Initiative, or NIH HEAL Initiative, that we expect will fund a significant portion of the early stage clinical development costs associated with this program. We have assembled a management team with significant industry experience to lead the commercialization of our product and the discovery, development and potential commercialization of our product candidates. We complement our management team with a group of scientific and clinical advisors that includes recognized experts in the fields of schizophrenia and other CNS disorders. COVID-19 InDecember 2019 , a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 ("COVID-19"), surfaced inWuhan, China . Since then, SARS-CoV-2 and COVID-19 have spread to multiple countries, includingthe United States . The COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures. In response to the spread of SARS-CoV-2 and COVID-19, we have instructed the majority of our office-based employees to work from home. In connection with our commercial launch of CAPLYTA, which is approved by FDA for the treatment of schizophrenia in adults, our commercial organization and sales force and medical organization are having significantly reduced personal interactions with physicians and customers and continue to conduct many promotional activities virtually, and elected to cease in-person interactions with physicians and customers entirely for some period of time in the interest of employee and community safety. Even though certain of our sales force and medical organization have begun to have personal interactions with physicians and customers, we may have to cease such personal interactions depending on the COVID-19 situation. In addition, the COVID-19 situation has resulted in a decrease in the number of patient visits to healthcare providers. As a result of the COVID-19 pandemic, or similar pandemics, we may experience disruptions that could severely impact our business, including our ability to successfully commercialize our only commercial product, CAPLYTA, inthe United States , and these disruptions could negatively impact our sales of CAPLYTA. Business interruptions from the current or future pandemics may also adversely impact the third parties we rely on to sufficiently manufacture CAPLYTA and to produce our product candidates in quantities we require, which may impair the commercialization and our research and development activities. We conduct clinical trials for our product candidates in many countries, includingthe United States ,Europe andRussia and may expand to other geographies. Timely enrollment of, completion of and reporting on our clinical trials is dependent upon these global clinical trial sites which are, or in the future may be, adversely affected by the COVID-19 pandemic or other pandemics. Some factors from the COVID-19 pandemic that have or may adversely affect the timing and conduct of our clinical trials and adversely impact our business generally, include but are not limited to delays or difficulties in clinical site initiation, patient enrollment, diversion of healthcare resources away from clinical trials to pandemic concerns, limitations on travel, regulatory delays and supply chain disruptions. In response to the COVID-19 pandemic, inMarch 2020 , the FDA announced its intention to temporarily postpone most inspections of foreign manufacturing facilities and products, as well as routine surveillance inspections of domestic manufacturing facilities, and it also provided guidance regarding the conduct of clinical trials, which has been further updated several times since that time. In mid-2020, the FDA noted it was continuing to ensure timely reviews of applications for medical products during the COVID-19 pandemic in line with its user fee performance goals and conducting mission-critical domestic and foreign inspections to ensure compliance of manufacturing facilities with FDA quality standards. The FDA subsequently publicized its development and use of an internal rating system called the COVID-19 Advisory Rating system, to assist in determining when and where it is safest to conduct such inspections based on data about the virus's trajectory in a given country, state and locality and the rules and guidelines that are put in place by foreign, state and local governments. As ofOctober 2021 , FDA is either continuing to, on a case-by-case basis, conduct only "mission-critical" inspections, or, where possible to do so safely, resuming prioritized domestic inspections, which generally include pre-approval inspections ("PAIs"). Foreign PAIs that are not deemed mission-critical remain postponed, while those deemed mission-critical will be considered for inspection on a case-by-case basis. FDA will use similar data to inform resumption of other prioritized operations abroad as it becomes feasible and advisable to do so. During the global response to the COVID-19 pandemic, moreover, there have been strategic redeployments of government resources to priority projects, including FDA and EMA resources and staff, which could have an impact on the timeline for review and approval of new marketing applications. Over the course of 2020 and to date in 2021,FDA's new drug review programs continued to 25 -------------------------------------------------------------------------------- Table of Contents meet key performance goals related to working with applicants and approving NDAs and NDA supplements, although the agency has also stated that the uncertainty of the COVID-19 situation may make it difficult to sustain that level of performance indefinitely. The FDA may not be able to maintain its normal pace with respect to new drug applications and delays or setbacks are possible in the future. The FDA has told industry that it intends to be as transparent as possible about its workload and performance metrics as the situation evolves, and also that it intends to communicate proactively with applicants during the review cycle regarding the need for a pre-approval inspection and whether such PAI is considered "mission-critical." Should FDA determine that a PAI is necessary for approval of an NDA or NDA supplement and such an inspection cannot be completed during the review cycle due to restrictions on travel or other safety protocols, FDA has stated that it generally intends to issue a complete response letter. Further, if there is inadequate information to make a determination on the acceptability of a facility, FDA may defer action on the application until an inspection can be completed. Such decisions will be based on the totality of the information available to the FDA, including considerations of whether it can obtain existing inspection reports from trusted foreign regulatory partners through mutual recognition and confidentiality agreements and/or secure additional records from the applicant, the manufacturing facility, or other inspected entities. Accordingly, FDA has encouraged applicants to effectively communicate with all their facilities and sites to ensure timely responses to any inquiries from FDA for information needed to support its assessment of pending drug applications. FDA has also stated that it is using all available tools and sources of information to support regulatory decisions on NDAs such as the historical compliance status of a manufacturing facility and other risk-benefit considerations pertaining to the proposed new drug product and its manufacturing process and facilities. In addition, whether or not FDA considers a facility inspection to be "mission-critical" involves several factors related to the public health benefits of the proposed new drug product, including but not limited to whether the candidate has been granted breakthrough therapy designation and whether the candidate is intended to treat or prevent a serious disease or medical condition for which there is no other appropriate substitute. Regulatory authorities outsidethe United States , including but not limited to the EMA, may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. The COVID-19 pandemic continues to rapidly evolve, and the severity and duration of the pandemic remain uncertain. The extent to which the pandemic impacts our business, including our commercial results, clinical trials, and preclinical studies will depend on future developments, which are highly uncertain. Results of Operations The following discussion summarizes the key factors our management believes are necessary for an understanding of our financial statements. Revenues Total revenues for the three and nine months endedSeptember 30, 2021 were approximately$22.2 million and$58.1 million , respectively, as compared to$7.4 million and$10.4 million , respectively, for the three and nine month periods endedSeptember 30, 2020 . Net revenues from product sales consist of sales of CAPLYTA, which was approved by the FDA inDecember 2019 . We initiated the commercial launch of CAPLYTA in lateMarch 2020 . We generated approximately$21.6 million and$56.2 million , respectively, in net revenue from product sales for the three and nine months endedSeptember 30, 2021 as compared to approximately$7.4 million and$10.1 million , respectively, for the three and nine months endedSeptember 30, 2020 . In addition, we had$0.6 million and$1.9 million , respectively, of grant revenues for the three and nine months endedSeptember 30, 2021 as compared to$0 and$232 thousand , respectively, of grant revenue for the three and nine months endedSeptember 30, 2020 . We have received and may continue to receive grants fromU.S. government agencies and foundations. The revenues that we may generate in the next several years may not be significant enough to fund our operations. Expenses The process of researching, developing and commercializing drugs for human use is lengthy, unpredictable and subject to many risks. We are unable, with certainty, to estimate either the costs or the timelines in which those costs will be incurred. The costs associated with the commercialization of CAPLYTA will be substantial and will be incurred prior to our generating sufficient revenue to offset these costs. Costs for the clinical trials of lumateperone, together with our anticipated clinical development programs for depressive disorders, ITI-214 and ITI-1284, will continue to consume a large portion of our current, as well as projected, resources. We intend to pursue other disease indications that lumateperone may address, but there are significant costs associated with pursuing FDA approval for those indications, which would include the cost of additional clinical trials. 26 --------------------------------------------------------------------------------
Table of Contents Our ITI-002 program has a compound, ITI-214, in Phase 1/2 development. We intend to pursue the development of our PDE program, including ITI-214 for the treatment of several CNS and non-CNS conditions, including cardiovascular disease. We have ongoing development programs for ITI-214 for Parkinson's disease. We also have a development program with our ITI-333 compound as a potential treatment for substance use disorders, pain and psychiatric comorbidities including depression and anxiety, and we have initiated a Phase 1 single ascending dose study evaluating the safety, tolerability and pharmacokinetics of ITI-333 in healthy volunteers. We are also developing ITI-1284 for the treatment of behavioral disturbances in patients with dementia, the treatment of dementia-related psychosis and for the treatment of certain depressive disorders, in the elderly. Our other projects are still in the preclinical stages, and will require extensive funding not only to complete preclinical testing, but also to commence and complete clinical trials. Expenditures that we incur on these projects will be subject to availability of funding in addition to the funding required for the advancement of lumateperone. Any failure or delay in the advancement of lumateperone could require us to re-allocate resources from our other projects to the advancement of lumateperone, which could have a material adverse impact on the advancement of these other projects and on our results of operations. Our operating expenses are comprised of (i) costs of product sales; (ii) research and development expenses; (iii) selling expenses; and (iv) general and administrative expenses. Costs of product sales are comprised of:
• direct costs of formulating, manufacturing and packaging drug product;
• overhead costs consisting of labor, customs, share-based compensation,
shipping, outside inventory management and other miscellaneous operating
costs; and • royalty payments on product sales.
Research and development costs are comprised of:
• internal recurring costs, such as costs relating to labor and fringe benefits, materials, supplies, facilities and maintenance; and
• fees paid to external parties who provide us with contract services, such
as
pre-clinical
testing, manufacturing and related testing, clinical trial activities and
license milestone payments.
Selling expenses are incurred in three major categories:
• salaries and related benefit costs of a dedicated sales force; • sales operation costs; and • marketing and promotion expenses.
General and administrative expenses are incurred in three major categories:
• salaries and related benefit costs; • patent, legal, and professional costs; and • office and facilities overhead. Product sold throughSeptember 30, 2021 consisted of raw materials that were previously charged to research and development expense prior to FDA approval of CAPLYTA. Because we previously expensed raw materials, the cost of drug product sold was lower than it would have been, which had a positive impact on our cost of product sales and related product gross margins for the three and nine months endedSeptember 30, 2021 and 2020. Our reported cost of product sales as a percentage of product sales, net was 9.3% or approximately$2.0 million and 9.8% or approximately$5.5 million , respectively, for the three and nine months endedSeptember 30, 2021 , as compared to 7.5% or approximately$0.6 million and 7.4% or approximately$0.8 million , respectively, for the three and nine months endedSeptember 30, 2020 . This increase in the percentages of cost of product sales is due primarily to a higher proportion of previously expensed product costs incurred prior to drug approval associated with product sold in the prior year. We expect to continue to have this favorable impact on cost of product sales and related product gross margins until our sales of CAPLYTA include drug product that is purchased after the FDA approval. We are currently unable to estimate when all previously expensed inventory costs will be recognized. We expect that research and development expenses will increase moderately as we proceed with our clinical trials of lumateperone for the treatment of bipolar depression and depressive disorders, other clinical trials, and increased manufacturing of drug product for clinical trials and pre-clinical development activities. We also expect that our selling, general and administrative costs will increase moderately over the next several quarters as we expand our marketing and promotional activities including advertising expenses and preparing for potential FDA approval of lumateperone for the treatment of bipolar depression. InSeptember 2018 , we amended our corporate headquarters lease to acquire 15,534 square feet of additional office space. We granted options to purchase 27 -------------------------------------------------------------------------------- Table of Contents 800,200 shares of our common stock in 2020 and granted options to purchase an additional 511,932 shares of our common stock inMarch 2021 . We also granted time based restricted stock units, or RSUs, for 1,007,402 shares of our common stock in 2020 and time based RSUs for 702,830 shares of our common stock inMarch 2021 . We also granted 162,377 options and 6,999 RSUs to board members and new hires inJune 2021 . We will recognize expense associated with these RSUs and options over three years in research and development expenses, selling, general and administrative expenses, and inventoriable manufacturing expenses. The following table sets forth our revenues, operating expenses, interest income and income tax expense for the three and nine-month periods endedSeptember 30, 2021 and 2020 (in thousands): For the Three Months For the Nine Months Ended September 30, Ended September 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) Revenues Product sales, net$ 21,606 $ 7,368 $ 56,192 $ 10,127 Grant revenue 601 - 1,940 232 Total revenues, net 22,207 7,368 58,132 10,359 Expenses Cost of product sales 2,001 556 5,497 754 Research and development 27,032 10,275 59,386 51,484 Selling, general and administrative 70,498 52,474 192,933 128,015 Total costs and expenses 99,531 63,305 257,816 180,253 Loss from operations (77,324 ) (55,937 ) (199,684 ) (169,894 ) Interest income 393 753 1,298 3,591 Income tax expense (benefit) 23 - (6 ) (3 ) Net loss$ (76,908 ) $ (55,184 ) $ (198,392 ) $ (166,306 ) Comparison of Three and Nine-Month Periods EndedSeptember 30, 2021 andSeptember 30, 2020 Total Revenues, Net Revenues for the three and nine months endedSeptember 30, 2021 were approximately$22.2 million and$58.1 million , respectively, compared to$7.4 million and$10.4 million , respectively for the three and nine months endedSeptember 30, 2020 . Net product sales were approximately$21.6 million and$56.2 million , respectively, for the three and nine months endedSeptember 30, 2021 as compared to approximately$7.4 million and$10.1 million , respectively for the three and nine months endedSeptember 30, 2020 . Net product sales were comprised of sales of CAPYLTA, which was approved by the FDA onDecember 20, 2019 and became available to wholesalers inMarch 2020 . The increase in net product sales was due to the initial launch occurring in the three months endedMarch 30, 2020 and the increase in prescriptions since that period. In addition, revenue from a government grant was approximately$0.6 million and$1.9 million , respectively, for the three and nine months endedSeptember 30, 2021 as compared to$0 and$232 thousand , respectively, for the three and nine months endedSeptember 30, 2020 . The increase in grant revenue relates to the increased activity within the applicable studies during the same periods. Cost of Product Sales Cost of product sales was approximately$2.0 million and$5.5 million , respectively, for the three and nine months endedSeptember 30, 2021 , compared to$0.6 million and$0.8 million , respectively, for the three and nine months endedSeptember 30, 2020 . Cost of product sales consisted primarily of product royalty fees, overhead and minimal direct costs. Product sold during the nine months endedSeptember 30, 2020 generally consisted of drug product that was previously produced and charged to research and development expense prior to FDA approval of CAPLYTA. Because the cost of drug product was charged as an expense prior to 2020, this had a positive impact on our cost of product sales and related product gross margins in 2020. In 2021, the product sold during the three and nine months endedSeptember 30, 2021 also consisted of drug product costs and production costs that were incurred and previously charged to research and development expense prior to FDA approval of CAPLYTA. The increase in the cost of product sales in the three and nine months endedSeptember 30, 2021 compared to the three and nine months endedSeptember 30, 2020 is due primarily to the increase in the volume of product sales. 28 -------------------------------------------------------------------------------- Table of Contents We will continue to have a cost of product sales that excludes the cost of the drug product that was incurred prior to FDA approval until our sales of CAPLYTA include drug product that is fully manufactured after the FDA approval. We are currently unable to estimate when all previously expensed inventory costs will be recognized. Research and Development Expenses The following tables set forth our research and development expenses for the three and nine-month periods endedSeptember 30, 2021 and 2020 (in thousands): Three Months Ended September 30,
Nine Months Ended
2021 2020 2021 2020 External costs 17,679 2,815 33,554 29,897 Internal costs 9,353 7,460 25,832 21,587 Total research and development expenses$ 27,032 $ 10,275 $ 59,386 $ 51,484 Lumateperone costs 14,750 4,360 32,032 30,402 Manufacturing costs 1,926 160 3,891 3,455 Stock based compensation 3,183 2,748 8,367 7,789 Other projects and overhead 7,173 3,007 15,096 9,838 Total research and development expenses$ 27,032 $ 10,275 $ 59,386 $ 51,484 Research and development expenses increased to$27.0 million for the three-month period endedSeptember 30, 2021 as compared to$10.3 million for the three-month period endedSeptember 30, 2020 , representing an increase of approximately 163%. This increase is due primarily to an increase of approximately$8.7 million for lumateperone clinical trial costs, and an increase of$4.2 million for other projects and overhead, including the ITI-1284, ITI-214, and ITI-333 programs, among others. In addition, the remaining increase is attributable to an increase in lumateperone non-clinical trial and manufacturing costs. Internal costs increased by approximately$1.9 million for the period due primarily to labor related costs. Research and development expenses increased to$59.4 million for the nine-month period endedSeptember 30, 2021 as compared to$51.5 million for the nine-month period endedSeptember 30, 2020 , representing an increase of approximately 15%. This increase is due primarily to an increase of approximately$5.3 million for other projects and overhead, including the ITI-1284, ITI-214, and ITI-333 programs, among others, and$1.6 million for lumateperone clinical trial and other costs. Internal costs increased by approximately$4.2 million for the period due primarily to labor related costs. As the development of lumateperone progresses, we anticipate research and development costs for lumateperone programs to increase moderately due primarily to conducting ongoing and planned Phase 3 and other clinical trials relating to our lumateperone programs in the next several years. We are also required to complete non-clinical testing to obtain FDA approval and manufacture material needed for clinical trial use, which includes non-clinical testing of the drug product and drug product in anticipation of possible additional FDA approvals of lumateperone for indications beyond schizophrenia. We currently have several projects, in addition to lumateperone, that are in the research and development stages. We have used internal resources and incurred expenses not only in relation to the development of lumateperone, but also in connection with these additional projects as well, including our PDE program. We have not, however, reported these costs on a project-by-project basis, as these costs are broadly spread among these projects. The external costs for these projects have been modest and are reflected in the table above in this section "- Research and Development Expenses ." The research and development process necessary to develop a pharmaceutical product for commercialization is subject to extensive regulation by numerous governmental authorities inthe United States and other countries. This process typically takes years to complete and requires the expenditure of substantial resources. The steps required before a drug may be marketed inthe United States generally include the following: • completion of extensive pre-clinical laboratory tests, animal studies, and formulation studies in accordance with the FDA's Good Laboratory Practice, or GLP, regulations;
• submission to the FDA of an Investigational New Drug application, or
IND, for human clinical testing, which must become effective before human clinical trials may begin; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each proposed indication; 29
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Table of Contents
• submission to the FDA of a New Drug Application, or NDA, after
completion of all clinical trials; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient, or API, and finished drug product are produced and tested to assess compliance with current Good Manufacturing Practices, or cGMPs; • satisfactory completion of FDA inspections of clinical trial sites to assure that data supporting the safety and effectiveness of product candidates has been generated in compliance with Good Clinical Practices; and
• FDA review and approval of the NDA prior to any commercial marketing
or sale of the drug inthe United States . The successful development of our product candidates and the approval process requires substantial time, effort and financial resources, and is uncertain and subject to a number of risks. We cannot be certain that any of our product candidates will prove to be safe and effective, will meet all of the applicable regulatory requirements needed to receive and maintain marketing approval, or will be granted marketing approval on a timely basis, if at all. Data from pre-clinical studies and clinical trials are susceptible to varying interpretations that could delay, limit or prevent regulatory approval or could result in label warnings related to or recalls of approved products. We, the FDA, or other regulatory authorities may suspend clinical trials at any time if we or they believe that the subjects participating in such trials are being exposed to unacceptable risks or if such regulatory agencies find deficiencies in the conduct of the trials or other problems with our product candidates. Other risks associated with our product candidates are described in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , as updated by the section entitled "Risk Factors" in this Quarterly Report on Form 10-Q and from time to time in our other periodic and current reports filed with theSEC . Selling, General and Administrative Expenses Selling, general and administrative costs for the three-month period endedSeptember 30, 2021 were$70.5 million as compared to$52.5 million in the three-month period endedSeptember 30, 2020 , which represents an increase of 34%, which was due to an increase in selling costs and an increase in general and administrative expenses as discussed below. Selling costs were$52.6 million for the three-month period endedSeptember 30, 2021 as compared to selling costs of$38.3 million in the same period in 2020, which represents an increase of 37%. This increase is primarily due to increases in commercialization, marketing and advertising expenses totaling$12.5 million , approximately$941 thousand in travel and other costs, and sales related labor costs of approximately$694 thousand . Salaries, bonuses and related benefit costs for our sales and marketing functions for the three months endedSeptember 30, 2021 and 2020 constituted approximately 32% and 43%, respectively, of our selling costs. General and administrative expenses were$17.9 million in the three-month period endedSeptember 30, 2021 as compared to$14.2 million for the same period in 2020, an increase of 27%. This increase is due to increases in stock-based compensation of$2.2 million , labor related costs of approximately$659 thousand , patent related expenses of approximately$353 thousand , and the remainder for insurance, professional fees, and other expenses. Salaries, bonuses and related benefit costs for our general and administrative functions for the three months endedSeptember 30, 2021 and 2020 constituted approximately 57% and 53%, respectively of our general and administrative costs. Selling, general and administrative costs for the nine-month period endedSeptember 30, 2021 were$192.9 million as compared to$128.0 million in the nine-month period endedSeptember 30, 2020 , which represents an increase of 51%, which was due to an increase in selling, marketing, and advertising expenses and an increase in general and administrative expenses as discussed below. Selling costs were$143.0 million for the nine-month period endedSeptember 30, 2021 as compared to$87.5 million in the same period in 2020, or an increase of 63%. This increase is primarily due to an increase in commercialization costs of$45.5 million , sales related labor costs of approximately$7.0 million and approximately$2.8 million in travel and other sales related expenses. Salaries, bonuses and related benefit costs for our sales and marketing functions for the nine months endedSeptember 30, 2021 and 2020 constituted approximately 35% and 50%, respectively, of our selling costs. General and administrative expenses for the nine months endedSeptember 30, 2021 were$50.0 million as compared to$40.5 million for the same period in 2020, an increase of 23%. This increase is due to increases in stock compensation expense of$5.0 million , labor and bonus expense of$2.1 million , professional fees of$1.4 million , and the remainder for insurance, lease expense, and other administrative expenses. Salaries, bonuses and related benefit costs for our general and administrative functions for the nine months endedSeptember 30, 2021 and 2020 constituted approximately 56% and 52%, respectively of our general and administrative costs. 30 -------------------------------------------------------------------------------- Table of Contents We expect selling, general and administrative costs to increase moderately over the next several quarters as we increase advertising costs, expand other marketing efforts, and prepare for the potential commercial launch of CAPLYTA for the treatment bipolar depression. Liquidity and Capital Resources ThroughSeptember 30, 2021 , we provided funds for our operations by obtaining a total of approximately$1.6 billion of cash primarily through public and private offerings of our common stock and other securities in prior periods, grants from government agencies and foundations and payments received under a terminated license and collaboration agreement. ThroughSeptember 30, 2021 , we have collected approximately$77.0 million from product sales, which we believe will increase going forward. We do not believe that grant revenue will be a significant source of funding in the future. OnJanuary 10, 2020 , we completed a public offering of 10,000,000 shares of our common stock. All of the shares in the offering were sold by the Company, with gross proceeds to the Company of$295.0 million and net proceeds of approximately$277.0 million , after deducting underwriting discounts, commissions and offering expenses. InJune 2020 , we sold 230,000 shares of common stock under our at-the-market equity program generating$5.6 million in net proceeds, which was received inJuly 2020 . In the third quarter of 2020, we sold an additional 512,791 shares of common stock utilizing our at-the-market program and received$12.3 million of net proceeds. InSeptember 2020 we completed a public offering of common stock in which we sold 12,666,667 shares of common stock at a public offering price of$30.00 per share for aggregate gross proceeds of$380.0 million . After deducting underwriting discounts, commissions and offering expenses, the net proceeds to the Company were approximately$357.8 million . As ofSeptember 30, 2021 , we had a total of approximately$478.7 million in cash and cash equivalents, available-for-sale investment securities and restricted cash, and approximately$49.9 million of short-term liabilities consisting entirely of liabilities from operations, including approximately$6.1 million of short-term lease obligations. In the nine months endedSeptember 30, 2021 , we spent approximately$248.1 million in cash for operations and equipment. During this period, we collected$60.1 million of product sales and$1.3 million of interest income, resulting in net cash used of$186.7 million . The use of cash was primarily for selling and marketing costs in connection with our commercialization of CAPLYTA, conducting clinical trials and non-clinical testing, product manufacturing, and funding recurring operating expenses. Based on our current operating plans, we expect that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the filing date of this quarterly report. During that time, we expect that our expenses will increase substantially due primarily to our commercialization activities and related infrastructure expansion in connection with the commercialization of CAPLYTA for the treatment of schizophrenia and in preparation for the potential approval of CAPLYTA for the treatment of bipolar depression; the development of lumateperone in our late-stage clinical programs; the development of our other product candidates, including ITI-214; the continuation of manufacturing activities for anticipated future sales of product and in connection with the development of lumateperone; and general operations. In the fourth quarter of 2021, we expect to spend up to$100 million primarily related to the marketing and commercialization of CAPLYTA, increasing inventory and sample levels of CAPLYTA, advancing lumateperone related programs including clinical trial conduct, regulatory activities, manufacturing, expansion of our administrative infrastructure and other development activities. Our other development activities will include efforts related to our ITI-1284, ITI-214, and ITI-333 programs, among others. However, the COVID-19 pandemic may negatively impact our commercialization of CAPLYTA, our ability to complete our ongoing or planned preclinical and clinical trials, our ability to obtain approval of any product candidates from the FDA or other regulatory authorities, and our workforce and therefore our research, development, and commercialization activities. This may ultimately have a material adverse effect on our liquidity, although we are unable to make any prediction with certainty given the rapidly changing nature of the pandemic and governmental and other responses to it. Subject to the levels of product sales we achieve, we may require significant additional financing in the future to continue to fund our operations. We believe that we have the funding in place to commercialize CAPLYTA in patients with schizophrenia and prepare for the potential approval and initial launch of CAPLYTA for the treatment of bipolar depression. We also plan to fund additional clinical trials of lumateperone for the treatment of depressive disorders and other CNS disorders; clinical development of our ITI-007 long acting injectable; additional clinical trials of lumateperone and ITI-1284; continued advancement of our PDE program, including ITI-214; research and preclinical development of our other product candidates; and the continuation of manufacturing activities in connection with the development of lumateperone. We anticipate requiring additional funds for further development of lumateperone in patients with depressive disorders and other indications, and for development of our other product 31 -------------------------------------------------------------------------------- Table of Contents candidates. We have incurred losses in every year since inception with the exception of 2011, when we received an up-front fee and a milestone payment related to a license agreement that has been terminated. These losses have resulted in significant cash used in operations. While we have several research and development programs in progress, the lumateperone program has advanced the furthest and will continue to consume increasing amounts of cash for conducting clinical trials and the testing and manufacturing of product material. As we continue to conduct the activities necessary to pursue FDA approval of lumateperone for additional indications and our other product candidates, as well as commercialization efforts, we expect the amount of cash to be used to fund operations to increase considerably over the next several years. We seek to balance the level of cash, cash equivalents and investments on hand with our projected needs and to allow us to withstand periods of uncertainty relative to the availability of funding on favorable terms. Until we can generate significant revenues from operations, we will need to satisfy our future cash needs through public or private sales of our equity securities, sales of debt securities, incurrence of debt from commercial lenders, strategic collaborations, licensing a portion or all of our product candidates and technology and, to a lesser extent, grant funding. OnAugust 30, 2019 , we filed a universal shelf registration statement on Form S-3, which was declared effective by theSEC onSeptember 12, 2019 , on which we registered for sale up to$350 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which included up to$75 million of common stock that we could issue and sell from time to time, throughSVB Leerink LLC acting as our sales agent, pursuant to the sale agreement that we entered into withSVB Leerink onAugust 29, 2019 for our "at-the-market" equity program. In the quarter endedJune 30, 2020 , we sold 230,000 shares of common stock under our "at-the-market" equity program which resulted in our receiving net proceeds of$5.6 million inJuly 2020 . In the quarter endedSeptember 30, 2020 , we issued an additional 512,791 shares of common stock under our "at-the-market" equity program and received approximately$12.3 million of net proceeds. OnSeptember 10, 2020 , we terminated the "at-the-market" equity program agreement withSVB Leerink LLC . In addition, onJanuary 6, 2020 , we filed an automatic shelf registration statement on Form S-3 with theSEC , which became effective upon filing, on which we registered for sale an unlimited amount of any combination of its common stock, preferred stock, debt securities, warrants, rights, and/or units from time to time and at prices and on terms that we may determine, so long as we continue to satisfy the requirements of a "well-known seasoned issuer" underSEC rules. These registration statements will remain in effect for up to three years from the respective dates they became effective. We cannot be sure that future funding will be available to us when we need it on terms that are acceptable to us, or at all. We sell securities and incur debt when the terms of such transactions are deemed favorable to us and as necessary to fund our current and projected cash needs. The amount of funding we raise through sales of our common stock or other securities depends on many factors, including, but not limited to, the magnitude of sales of CAPLYTA, the status and progress of our product development programs, projected cash needs, availability of funding from other sources, our stock price and the status of the capital markets. Due to the volatile nature of the financial markets, equity and debt financing may be difficult to obtain. Additionally, the continued spread of COVID-19 and uncertain market conditions may limit our ability to access any financing. In addition, any unfavorable results in the commercialization of CAPLYTA and unfavorable development or delay in the progress of our lumateperone program could have a material adverse impact on our ability to raise additional capital. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, 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. If adequate funds are not available to us on a timely basis, we may be required to: (1) delay, limit, reduce or terminate pre-clinical studies, clinical trials or other clinical development activities for one or more of our product candidates, including our lead product candidate lumateperone, ITI-214, and our other product candidates; (2) delay, limit, reduce or terminate our discovery research or pre-clinical development activities; or (3) enter into licenses or other arrangements with third parties on terms that may be unfavorable to us or sell, license or relinquish rights to develop or commercialize our product candidates, technologies or intellectual property at an earlier stage of development and on less favorable terms than we would otherwise agree. Our cash is maintained in checking accounts, money market accounts, money market mutual funds,U.S. government agency securities, certificates of deposit, commercial paper, corporate notes and corporate bonds at major financial institutions. Due to the current low interest rates available for these instruments, we are earning limited interest income. We do not expect interest income to be a significant source of funding over the next several quarters. Our investment portfolio has historically not been adversely impacted by problems in the credit markets, but there can be no assurance that our investment portfolio will not be adversely affected in the future. 32 -------------------------------------------------------------------------------- Table of Contents In 2014, we entered into a long-term lease with a related party which, as amended, provided for a lease of 16,753 square feet of useable laboratory and office space located at430 East 29th Street ,New York, New York 10016. Concurrent with this lease, we entered into a license agreement to occupy certain vivarium related space in the same facility for the same term, rent and escalation provisions as the lease. This license has the primary characteristics of a lease and is characterized as a lease in accordance with ASU 2016-02 for accounting purposes. InSeptember 2018 , we further amended the lease to obtain an additional 15,534 square feet of office space beginningOctober 1, 2018 and to extend the term of the lease for previously acquired space. The lease, as amended, has a term of 14.3 years ending inMay 2029 . InFebruary 2019 , we entered into a long-term lease for 3,164 square feet of office space inTowson, Maryland beginningMarch 1, 2019 . The lease has a term of 3.2 years ending inApril 2022 . OnMay 17, 2019 , we entered into a vehicle fleet lease with a company to acquire motor vehicles for certain employees. The vehicle fleet lease provides for individual leases for the vehicles, which at each lease commencement was determined to qualify for operating lease treatment. We began leasing vehicles under the vehicle fleet lease inMarch 2020 . Critical Accounting Policies and Estimates Our critical accounting policies are those policies which require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. We evaluate our estimates, judgments, and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. A summary of our critical accounting policies is presented in Part II, Item 7, of our Annual Report on Form 10-K for the year endedDecember 31, 2020 and Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. There have been no material changes to our critical accounting policies during the nine months endedSeptember 30, 2021 . The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States , orU.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses for the periods presented. Judgments must also be made about the disclosure of contingent liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management makes estimates and exercises judgment in research and development, including clinical trial accruals. Actual results may differ from those estimates and under different assumptions or conditions. Recently Issued Accounting Pronouncements We review new accounting standards to determine the expected financial impact, if any, that the adoption of each such standard will have. For the recently issued accounting standards that we believe may have an impact on our financial statements, see "Recently Issued Accounting Standards" in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, and "Recently Issued Accounting Standards" in Note 2 to our audited consolidated financial statements and "Recently Issued Accounting Pronouncements" in Part II, Item 7, in our Annual Report on Form 10-K for the year endedDecember 31, 2020 filed onFebruary 25, 2021 . Certain Factors That May Affect Future Results of Operations TheSEC encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other important factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about: the accuracy of our estimates regarding expenses, revenues, uses of cash, cash equivalents and investment securities, capital requirements and the need for additional financing; our expectations regarding our commercialization of CAPLYTA, including the impact of COVID-19 on the commercialization of CAPLYTA and our ability to adapt our approach as appropriate; the duration and severity of the COVID-19 pandemic and its impact on our business; the supply and availability of and demand for our product; the initiation, cost, timing, progress and results of our development activities, non-clinical studies and clinical trials; the timing of and our ability to obtain and maintain regulatory approval, or submit an application for regulatory approval, of lumateperone and our other existing product candidates, any product candidates that we may develop, and any related restrictions, limitations, and/or warnings in the label of any approved product candidates; our plans to research, develop and commercialize lumateperone and our other current and future product candidates; the election by any 33
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Table of Contents collaborator to pursue research, development and commercialization activities; our ability to obtain future reimbursement and/or milestone payments from our collaborators; our ability to attract collaborators with development, regulatory and commercialization expertise; our ability to obtain and maintain intellectual property protection for our product candidates; our ability to successfully commercialize lumateperone and our other product candidates; the performance of our third-party suppliers and manufacturers and our ability to obtain alternative sources of raw materials; our ability to obtain additional financing; our use of the proceeds from our securities offerings; our exposure to investment risk, interest rate risk and capital market risk; and our ability to attract and retain key scientific, management, or sales and marketing personnel. Words such as "may," "anticipate," "estimate," "expect," "may," "project," "intend," "plan," "believe," "potential," "predict," "project," "likely," "will," "would," "could," "should," "continue" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify forward-looking statements. All forward-looking statements are management's present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: whether the preclinical and clinical results of the lumateperone studies will meet the regulatory requirements for approval by the FDA for the proposed indications; whether the sNDAs for lumateperone will be approved by the FDA and whether the FDA will complete its review within its target timelines, including its target action date; whether the FDA will require additional information, whether we will be able to provide in a timely manner any additional information that the FDA requests, and whether such additional information will be satisfactory to the FDA; there are no guarantees that CAPLYTA will be commercially successful; we may encounter issues, delays or other challenges in commercializing CAPLYTA; the COVID-19 pandemic may negatively impact our commercial plans and sales for CAPLYTA; the COVID-19 pandemic may negatively impact the conduct of, and the timing of enrollment, completion and reporting with respect to, our clinical trials; whether CAPLYTA receives adequate reimbursement from third-party payors; the degree to which CAPLYTA receives acceptance from patients and physicians for its approved indication; challenges associated with execution of our sales activities, which in each case could limit the potential of our product; results achieved in CAPLYTA in the treatment of schizophrenia following commercialization may be different than observed in clinical trials, and may vary among patients; any other impacts on our business as a result of or related to the COVID-19 pandemic; risks associated with our current and planned clinical trials; we may encounter unexpected safety or tolerability issues with CAPLYTA for the treatment of schizophrenia or in ongoing or future trials and other development activities; our other product candidates may not be successful or may take longer and be more costly than anticipated; product candidates that appeared promising in earlier research and clinical trials may not demonstrate safety and/or efficacy in larger-scale or later clinical trials or in clinical trials for other indications; our proposals with respect to the regulatory path for our product candidates may not be acceptable to the FDA; our reliance on collaborative partners and other third parties for development, commercialization, manufacturing or supply of our product and product candidates; and the other risk factors detailed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, as updated under the heading "Risk Factors" from time to time in our subsequent periodic and current reports filed with theSEC . In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report on Form 10-Q or in any document incorporated by reference might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to the Company or to any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
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