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 on February 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 on February 25, 2021, as updated from time to time in our subsequent
periodic and current reports filed with the SEC.
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. In December 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 late March 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. In September 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.
In July 2019, we announced topline results from our first monotherapy study,
Study 401, conducted in the 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. In February 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. In
May 2021, we announced that the FDA had accepted the sNDAs for review and
assigned a Prescription Drug User Fee Act (PDUFA) target action date of
December 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.

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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 in December 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.

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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. In December 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 the
National 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
In December 2019, a novel strain of
coronavirus, SARS-CoV-2,
which causes coronavirus disease 2019
("COVID-19"),
surfaced in Wuhan, China. Since then,
SARS-CoV-2
and
COVID-19
have spread to multiple countries, including the 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, in the 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,
including the United States, Europe and Russia 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, in March 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 of October 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

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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 outside the 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 ended September 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 ended September 30, 2020. Net revenues from product sales consist of
sales of CAPLYTA, which was approved by the FDA in December 2019. We initiated
the commercial launch of CAPLYTA in late March 2020. We generated approximately
$21.6 million and $56.2 million, respectively, in net revenue from product sales
for the three and nine months ended September 30, 2021 as compared to
approximately $7.4 million and $10.1 million, respectively, for the three and
nine months ended September 30, 2020. In addition, we had $0.6 million and
$1.9 million, respectively, of grant revenues for the three and nine months
ended September 30, 2021 as compared to $0 and $232 thousand, respectively, of
grant revenue for the three and nine months ended September 30, 2020. We have
received and may continue to receive grants from U.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.

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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 through September 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
ended September 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 ended
September 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 ended
September 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. In September 2018, we amended our corporate
headquarters lease to acquire 15,534 square feet of additional office space. We
granted options to purchase

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800,200 shares of our common stock in 2020 and granted options to purchase an
additional 511,932 shares of our common stock in March 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 in
March 2021. We also granted 162,377 options and 6,999 RSUs to board members and
new hires in June 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 ended September 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 Ended September 30, 2021 and
September 30, 2020
Total Revenues, Net
Revenues for the three and nine months ended September 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 ended
September 30, 2020. Net product sales were approximately $21.6 million and
$56.2 million, respectively, for the three and nine months ended September 30,
2021 as compared to approximately $7.4 million and $10.1 million, respectively
for the three and nine months ended September 30, 2020. Net product sales were
comprised of sales of CAPYLTA, which was approved by the FDA on December 20,
2019 and became available to wholesalers in March 2020. The increase in net
product sales was due to the initial launch occurring in the three months ended
March 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 ended September 30, 2021 as compared
to $0 and $232 thousand, respectively, for the three and nine months ended
September 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 ended September 30, 2021, compared
to $0.6 million and $0.8 million, respectively, for the three and nine months
ended September 30, 2020. Cost of product sales consisted primarily of product
royalty fees, overhead and minimal direct costs. Product sold during the nine
months ended September 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 ended September 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 ended September 30, 2021
compared to the three and nine months ended September 30, 2020 is due primarily
to the increase in the volume of product sales.

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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 ended September 30, 2021 and 2020 (in thousands):

                                       Three Months Ended September 30,     

Nine Months Ended September 30,


                                          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 ended September 30, 2021 as compared to $10.3 million for the three-month
period ended September 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 ended September 30, 2021 as compared to $51.5 million for the nine-month
period ended September 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 in the 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 in the 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;



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• 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 in the 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 ended December 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 the
SEC.
Selling, General and Administrative Expenses
Selling, general and administrative costs for the three-month period ended
September 30, 2021 were $70.5 million as compared to $52.5 million in the
three-month period ended September 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 ended September 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 ended
September 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
ended September 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 ended September 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 ended
September 30, 2021 were $192.9 million as compared to $128.0 million in the
nine-month period ended September 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 ended September 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 ended September 30, 2021 and 2020 constituted approximately 35% and
50%, respectively, of our selling costs.
General and administrative expenses for the nine months ended September 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 ended September 30,
2021 and 2020 constituted approximately 56% and 52%, respectively of our general
and administrative costs.

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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
Through September 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. Through September 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.
On January 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.
In June 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 in
July 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.
In September 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 of September 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 ended September 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

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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. On August 30, 2019, we filed
a universal shelf registration statement on Form
S-3,
which was declared effective by the SEC on September 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,
through SVB Leerink LLC acting as our sales agent, pursuant to the sale
agreement that we entered into with SVB Leerink on August 29, 2019 for our
"at-the-market"
equity program. In the quarter ended June 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 in
July 2020. In the quarter ended September 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. On
September 10, 2020, we terminated the
"at-the-market"
equity program agreement with SVB Leerink LLC.
In addition, on January 6, 2020, we filed an automatic shelf registration
statement on Form
S-3
with the SEC, 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" under SEC 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.

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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 at 430 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. In September 2018, we further amended the lease to
obtain an additional 15,534 square feet of office space beginning October 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 in May 2029. In February
2019, we entered into a long-term lease for 3,164 square feet of office space in
Towson, Maryland beginning March 1, 2019. The lease has a term of 3.2 years
ending in April 2022. On May 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 in March 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 ended December 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 ended September 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 in the United States, or U.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 ended December 31, 2020 filed on February 25, 2021.
Certain Factors That May Affect Future Results of Operations
The SEC 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

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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 the SEC.
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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