You should read the following discussion of our financial condition and results
of operations in conjunction with our condensed consolidated financial
statements and the notes thereto included elsewhere in this Quarterly Report on
Form 10-Q and with our annual audited consolidated financial statements included
in our Annual Report on Form 10-K for the year ended
Overview
We are a clinical-stage biopharmaceutical company focused on the development and commercialization of proprietary product candidates to treat patients suffering from central nervous system ("CNS") diseases. Leveraging our scientific insights and clinical experience, we have acquired or in-licensed compounds that we believe have innovative mechanisms of actions and therapeutic profiles that potentially address the unmet needs of patients with these diseases.
We are developing roluperidone for the treatment of negative symptoms in
patients with schizophrenia and have exclusive rights to develop and
commercialize MIN-301 for the treatment of Parkinson's disease. In addition, we
previously co-developed seltorexant with
We have not received regulatory approvals to commercialize any of our product candidates, and we have not generated any revenue from the sales or license of our product candidates. We have incurred significant operating losses every year since inception. We expect to incur net losses and negative cash flow from operating activities for the foreseeable future in connection with the clinical development and the potential regulatory approval, infrastructure development and potential commercialization of our product candidates.
Clinical and Regulatory Updates
On
Financial Overview
Revenue. None of our product candidates have been approved for commercialization and we have not received any revenue in connection with the sale or license of our product candidates.
Research and Development Expenses. Research and development costs are expensed as they are incurred and consist principally of costs incurred in connection with the development of our product candidates including: fees paid to consultants and clinical research organizations ("CROs"), investigator grants, patient screening, lab work, database management, material management, statistical analysis, license fees, regulatory compliance, and costs related to salaries, benefits, bonuses and stock-based compensation granted to employees in research and development functions.
Completion dates and costs can vary significantly by product candidate and are difficult to predict. We anticipate making determinations as to which programs to pursue and the level of funding to direct to each program on an ongoing basis in response to the scientific and clinical success or failure of each product candidate, the estimated costs to continue the development program relative to our available resources, as well as an ongoing assessment of each product candidate's commercial potential. We will need to raise additional capital or may seek additional product collaborations in the future to complete the development and commercialization of our product candidates.
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General and Administrative Expenses. General and administrative costs are expensed as they are incurred and consist principally of costs for facility and information systems, professional fees for auditing, consulting and legal services and costs related to salaries, benefits, bonuses and stock-based compensation granted to employees in administrative functions. General and administrative expenses also include costs for maintaining a publicly listed company including increased audit and legal fees, compliance with securities laws, corporate governance and investor relations.
Foreign Exchange Gains (Losses). Foreign exchange gains (losses) are comprised
primarily of gains and losses on foreign currency transactions primarily related
to research and development expenses. We incur certain expenses, primarily in
Euros, and record these expenses in
Investment Income. Investment income consists of income earned on our cash equivalents and marketable securities.
Non-cash interest expense for the sale of future royalties. Non-cash interest expense for the sale of future royalties consists of the non-cash interest expense associated with the Royalty Pharma agreement.
Results of Operations
Comparison of Three Months Ended
Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Foreign Exchange Gains (Losses)
Foreign exchange gains were
Investment Income
Investment income was
Non-cash interest expense for the sale of future royalties
Non-cash interest expense for the sale of future royalties was
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Comparison of Nine Months Ended
Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Foreign Exchange Losses
Foreign exchange losses were zero and
Investment Income
Investment income was
Non-cash interest expense for the sale of future royalties
Non-cash interest expense for the sale of future royalties was
Liquidity and Capital Resources
Sources of Liquidity
As of
Sources of Funds
At-the-Market Equity Offering Program
In
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Our previous sales agreement with Jefferies entered into in
Seltorexant Royalties
We previously co-developed seltorexant with Janssen for the treatment of insomnia disorder and adjunctive treatment of MDD. During 2020, we exercised our right to opt out of a joint development agreement with Janssen for the future development of seltorexant. As a result, we were entitled to collect royalties in the mid-single digits on potential future sales of seltorexant worldwide in certain indications, with no further financial obligations to Janssen.
On
Uses of Funds
To date, we have not generated any revenue from sales of products. We have only
generated collaborative revenue due to opting out of our license and
co-development agreement with Janssen. Furthermore, the
Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, commercialization, 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. There can be no assurance that such additional funding, if available, can be obtained on terms acceptable to us, and the uncertainty and volatility in the capital markets caused by the continuing COVID-19 pandemic may negatively impact the availability and cost of capital. If we are unable to obtain additional financing, future operations would need to be scaled back or discontinued. We believe that our existing cash, cash equivalents, and restricted cash will be sufficient to meet our cash commitments for at least the next 12 months after the date that the interim condensed consolidated financial statements are issued. The timing of future capital requirements depends upon many factors including the size and timing of future clinical trials, the timing and scope of any strategic partnering activity and the progress of other research and development activities.
Cash Flows
The tables below set forth our significant sources and uses of cash for the periods. Nine Months Ended September 30, 2022 2021 (dollars in millions) Net cash (used in) provided by: Operating activities $ (20.5 ) $ (19.8 ) Investing activities - - Financing activities - 60.0 Net (decrease) increase in cash $ (20.5 ) $ 40.2 19 --------------------------------------------------------------------------------
Net cash used in operating activities of approximately
Net cash used in operating activities of approximately
Net Cash Provided by Investing Activities
Net cash provided by investing activities was zero during the nine months ended
Net Cash Provided by Financing Activities
Net cash provided by financing activities was zero during the nine months ended
Net cash provided by financing activities of
Reverse Stock Split
On
The Amendment provided that, at the effective time of the Amendment, every eight (8) shares of our issued and outstanding common stock automatically combined into one issued and outstanding share of common stock, without any change in par value per share. The reverse stock split affected all shares of our common stock outstanding immediately prior to the effective time of the Amendment. As a result of the reverse stock split, proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted stock units and restricted stock awards issued by us and outstanding immediately prior to the effective time of the Amendment, which resulted in a proportionate decrease in the number of shares of our common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock units and restricted stock awards, and, in the case of stock options, a proportionate increase in the exercise price of all such stock options. In addition, the number of shares reserved for issuance under our equity compensation plans immediately prior to the effective time of the Amendment was reduced proportionately. The reverse stock split did not affect the number of shares of common stock authorized for issuance under our Amended and Restated Certificate of Incorporation, which remained at 125,000,000 shares.
No fractional shares were issued as a result of the reverse stock split.
Stockholders of record who would otherwise have been entitled to receive a
fractional share received a cash payment in lieu thereof. The reverse stock
split affected all stockholders proportionately and did not affect any
stockholder's percentage ownership of our common stock (except to the extent
that the reverse stock split results in any stockholder owning only a fractional
share). As a result of the reverse stock split, the number of our outstanding
shares of common stock as of
All share and per share amounts in the accompanying financial statements,
related footnotes, and management's discussion and analysis have been adjusted
retroactively to reflect the reverse stock split as if it had occurred at the
beginning of the earliest period presented. Our common stock began trading on
The Nasdaq Global Market on a split-adjusted basis when the market opened on
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Critical Accounting Policies and Estimates
In our Annual Report on Form 10-K for the fiscal year ended
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the
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