Item 2.
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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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 Managements Discussion and Analysis of
Financial Condition and Results of Operations in our Annual Report on Form
10-K
filed on March 1, 2017. 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 March 1, 2017, 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 and clinical development of innovative, small molecule drugs that address underserved medical needs in neuropsychiatric and neurological disorders by targeting intracellular signaling mechanisms
within the central nervous system, or CNS. Lumateperone (also known as
ITI-007)
is our lead product candidate with mechanisms of action that, we believe, may represent an effective treatment across multiple
therapeutic indications. In our
pre-clinical
and clinical trials to date, lumateperone combines potent serotonin
5-HT2A
receptor antagonism, dopamine receptor
phosphoprotein modulation, or DPPM, glutamatergic modulation, and serotonin reuptake inhibition into a single drug candidate for the treatment of acute and residual schizophrenia and for the treatment of bipolar disorder, including bipolar
depression. At dopamine D2 receptors, lumateperone has been demonstrated to have dual properties and to act as both a
pre-synaptic
partial agonist and a post-synaptic antagonist. Lumateperone has also been
demonstrated to have affinity for dopamine D1 receptors and indirectly stimulate phosphorylation of glutamatergic NMDA GluN2B receptors in a mesolimbic specific manner. We believe that this regional selectivity in brain areas thought to mediate the
efficacy of antipsychotic drugs, together with serotonergic, glutamatergic, and dopaminergic interactions, may result in efficacy for a broad array of symptoms associated with schizophrenia and bipolar disorder with improved psychosocial function.
The serotonin reuptake inhibition potentially allows for antidepressant activity in the treatment of schizoaffective disorder, other disorders with
co-morbid
depression, and/or as a stand-alone treatment for
major depressive disorder. We believe lumateperone may also be useful for the treatment of other psychiatric and neurodegenerative disorders, particularly behavioral disturbances associated with dementia, autism, and other CNS diseases. Lumateperone
is in Phase 3 clinical development as a novel treatment for schizophrenia, bipolar depression and agitation associated with dementia, including Alzheimers disease, or AD.
Lumateperone for the Treatment of Schizophrenia
In September 2015, we announced
top-line
clinical results from our first Phase 3 clinical trial of
lumateperone for the treatment of patients with schizophrenia. This randomized, double-blind, placebo-controlled Phase 3 clinical trial was conducted at 12 sites in the United States with 450 patients randomized (1:1:1) to receive either 60 mg of
ITI-007,
40 mg of
ITI-007
or placebo once daily in the morning for 28 days. The
pre-specified
primary efficacy measure was change from
baseline versus placebo at study endpoint (4 weeks) on the centrally rated Positive and Negative Syndrome Scale, or PANSS, total score. In this trial, the once-daily dose of 60 mg of
ITI-007
met the primary
endpoint and demonstrated antipsychotic efficacy with statistically significant superiority over placebo at week 4 (study endpoint) with additional improvements observed in social function. Moreover, the 60 mg dose of
ITI-007
showed significant antipsychotic efficacy as early as week 1, which was maintained at every time point throughout the entire study.
ITI-007
showed a dose-related
improvement in symptoms of schizophrenia with the 40 mg dose approximating the trajectory of improvement seen with the 60 mg dose, but the effect with 40 mg did not reach statistical significance on the primary endpoint. In addition, the 60 mg dose
of
ITI-007
met the key secondary endpoint of statistically significant improvement on the Clinical Global Impression Scale for Severity of Illness, or
CGI-S.
The 40 mg
dose of
ITI-007
also demonstrated a statistically significant improvement versus placebo on the
CGI-S,
though not formally tested against placebo as a key secondary
endpoint since it did not separate on the primary endpoint. A high treatment completion rate was observed with
ITI-007
(87% of patients completed treatment on
ITI-007
60
mg, 82% completed on
ITI-007
40 mg, and 75% completed on placebo). Patients randomized to
ITI-007
60 mg demonstrated a statistically significant longer time to treatment
discontinuation due to any reason compared to placebo (p=0.006) and a statistically significant longer time to treatment discontinuation due to lack of efficacy (p=0.01). Consistent with previous studies, lumateperone had a favorable safety and
tolerability profile as evidenced by motoric, metabolic, and cardiovascular characteristics similar to placebo, and
17
no clinically significant changes in akathisia, extrapyramidal symptoms, prolactin, body weight, glucose, insulin, or lipids. The number of patients who discontinued treatment in this study due
to an adverse event was low and the time to treatment discontinuation due to an adverse event was not statistically significantly different from placebo for either dose of lumateperone.
In September 2015, we also announced
top-line
data from an open-label positron emission tomography, or
PET, study of lumateperone examining brain occupancy of striatal D2 receptors. This study was conducted in patients diagnosed with schizophrenia who were otherwise healthy and stable with respect to their psychosis. After washout from their previous
antipsychotic medication for at least two weeks, PET was used to determine target occupancy in brain regions at baseline (drug-free) and again after two weeks of once daily lumateperone oral administration. In this trial, the 60 mg dose of
ITI-007
was associated with a mean of approximately 40% striatal dopamine D2 receptor occupancy. As predicted by preclinical and earlier clinical data, lumateperone demonstrated antipsychotic effect at relatively
low striatal D2 receptor occupancy, lower than the occupancy range required by most other antipsychotic drugs. Unlike any existing schizophrenia treatment, this dopamine receptor phosphoprotein modulator, or DPPM, acts as a
pre-synaptic
partial agonist and post-synaptic antagonist at D2 receptors. We believe this mechanism likely contributes to the favorable safety profile of lumateperone, with reduced risk for hyperprolactinemia,
akathisia, extrapyramidal symptoms, and other motoric side effects.
The
top-line
results from our
first Phase 3 clinical trial of lumateperone confirmed the earlier Phase 2 results that we announced in December 2013, in which lumateperone exhibited antipsychotic efficacy in a randomized, double-blind, placebo and active controlled clinical trial
in patients with schizophrenia. In this Phase 2 trial
(ITI-007-005),
335 patients were randomized to receive one of four treatments: 60 mg of
ITI-007,
120 mg of
ITI-007,
4 mg of risperidone (active control) or placebo in a 1:1:1:1 ratio, orally once daily for 28 days. The primary endpoint for this clinical trial was
change from baseline to Day 28 on the PANSS total score. In this study, lumateperone met the trials
pre-specified
primary endpoint, improving symptoms associated with schizophrenia as measured by a
statistically significant and clinically meaningful decrease in the PANSS total score. The trial also met key secondary outcome measures related to efficacy on PANSS subscales and safety.
In September 2016, we announced
top-line
results from the second Phase 3 clinical trial
(ITI-007-302)
of lumateperone for the treatment of patients with schizophrenia. In this trial, neither dose of lumateperone separated from placebo on the primary endpoint,
change from baseline on the PANSS total score, in the
pre-defined
patient population. The active control, risperidone, did separate from placebo. In this trial, lumateperone was statistically significantly
better than risperidone on key safety and tolerability parameters and exhibited a safety profile similar to placebo. This replicates the safety and tolerability findings of our Phase 2 study
(ITI-007-005)
in which the efficacy of
ITI-007
60 mg and risperidone, the active control, were similar.
We believe lumateperone did not separate from placebo on the
pre-specified
primary endpoint in the
ITI-007-302
study in part due to an unusually high placebo response at certain sites which disproportionately affected the trial results and contributed to the efficacy
outcome of this study compared to our two previous positive efficacy studies. In addition, we believe other confounding factors may have played a role in the efficacy outcome of
ITI-007-302,
including an expectation bias and the potential for functional unblinding. We believe the lumateperone late-stage clinical development program, including
two large, well-controlled positive studies and supportive evidence from this second Phase 3 study, collectively provide evidence of the efficacy and safety of lumateperone for the treatment of schizophrenia. Across all three of our efficacy trials,
ITI-007
60 mg improved symptoms of schizophrenia with the same trajectory and magnitude of change from baseline in the primary endpoint, the PANSS total score.
As part of our ongoing dialogue with the U.S. Food and Drug Administration, or FDA, regarding our lumateperone development program in
schizophrenia, we requested guidance from the FDA on the acceptability of the two positive well controlled clinical trials we have conducted (Study
ITI-007-005
and Study
ITI-007-301),
with supportive evidence from Study
ITI-007-302,
as the basis for the
submission of a new drug application, or NDA, for the treatment of schizophrenia. In connection with this request we provided extensive information and data analyses to the FDA relating to the three studies. The FDA has confirmed that the results of
Study
ITI-007-302
do not preclude us from submitting an NDA based on the efficacy studies we have conducted to date. We believe our schizophrenia clinical development
program collectively provides evidence of the efficacy and safety of lumateperone for the treatment of schizophrenia.
In addition, the
FDA had raised questions relating to certain findings observed in nonclinical toxicology studies of lumateperone in an animal species and requested additional information to confirm that the nonclinical findings are not indicative of a safety risk
associated with long term exposure in humans. The data we presented supports the position that there are significant species differences in the metabolism of lumateperone. Based on the FDAs agreement that we presented adequate data indicating
that the toxicity seen in the animal species is not relevant to humans, we are proceeding with our long-term safety study of lumateperone in patients with schizophrenia. Further, based on feedback from the FDA, we have incorporated additional
monitoring in our long-term safety study for metabolites seen in animal species but not seen to date in humans, and also will continue to monitor for toxicities in our nonclinical studies. With over 2,000 people exposed to date, lumateperone has
been well-tolerated with a safety profile similar to placebo. Accordingly, we are moving forward with our long-term safety study of lumateperone and intend to submit an NDA for the treatment of schizophrenia by
mid-2018.
18
In September 2017, we announced positive topline data from the first part of an open-label safety
switching study in which 302 patients with stable symptoms of schizophrenia were switched from
standard-of-care
antipsychotic medications to lumateperone
(ITI-007
60 mg) with no dose titration of lumateperone required for a
six-week
treatment duration, then switched back to
standard-of-care.
Many currently available antipsychotic agents are associated with motor side effects and/or weight gain, cardiovascular liabilities, dyslipidemia, and hyperglycemia. In this study,
lumateperone was generally well tolerated with a favorable safety profile. Statistically significant improvements from
standard-of-care
baseline were observed in body
weight, cardiometabolic and endocrine parameters in patients with stable symptoms of schizophrenia when switched to lumateperone and worsened again when switched back to
standard-of-care
medication. Additionally, treatment with lumateperone was not associated with the motor or cardiovascular disturbances often associated with other
antipsychotic medications. These data are consistent with previous study results reflecting a safety profile similar to placebo in placebo-controlled trials with lumateperone in patients with acutely exacerbated schizophrenia and extend this
favorable safety profile to this stable patient population. Symptoms of schizophrenia did not worsen upon switch to lumateperone from
standard-of-care.
Rather,
statistically significant improvement from baseline was observed in the PANSS mean total score. Notably, greater improvements were observed in subgroups of patients with elevated symptomatology such as those with comorbid symptoms of depression and
those with prominent negative symptoms.
Lumateperone for the Treatment of Depressive Episodes Associated with Bipolar Disorder
(Bipolar Depression)
Our bipolar depression program consists of three Phase 3 multi-center, randomized, double-blind,
placebo-controlled clinical trials. In the
ITI-007-401
and the
ITI-007-404
trials
lumateperone is being evaluated as a monotherapy and in the
ITI-007-402
trial lumateperone is being evaluated as an adjunctive therapy with lithium or valproate. All
three trials are evaluating lumateperone in patients with a clinical diagnosis of Bipolar I or Bipolar II disorder and who are experiencing a current major depressive episode. In the
ITI-007-401
and the
ITI-007-402
trials, patients are randomized to receive one of three
treatments: 60 mg
ITI-007,
40 mg
ITI-007,
or placebo in a 1:1:1 ratio orally once daily for 6 weeks. In the
ITI-007-404
trial patients are randomized to receive 40 mg
ITI-007
or placebo in a 1:1 ratio orally once daily for 6 weeks. In the
ITI-007-401
and the
ITI-007-404
trials, patients receive lumateperone or placebo as a monotherapy. In the
ITI-007-402
trial, patients receive lumateperone or placebo adjunctive to their existing mood stabilizer lithium or valproate. In each of these trials, we are employing a
number of strategies designed to ensure we recruit appropriately diagnosed patients in an effort to reduce the risk of a high placebo response. Patient enrollment in the
ITI-007-401
trial is expected to complete in the first half of 2018. Patient enrollment in the
ITI-007-402
trial and the
ITI-007-404
trial is expected to complete in the second half of
2018.
The primary endpoint for these clinical trials is change from baseline at Day 42 on the Montgomery-Åsberg Depression Rating
Scale, or MADRS, total score versus placebo. The MADRS is a well-validated
10-item
checklist that measures the ability of a drug to reduce overall severity of depressive symptoms. Individual items are rated by
an expert clinician on a scale of 0 to 6 in which a score of 6 represents the most depressed evaluation for each item assessed. The total score ranges from 0 to 60. Secondary endpoints include measures of social function and quality of life that may
illustrate the differentiated clinical profile of lumateperone. Safety and tolerability are also assessed in these clinical trials.
Lumateperone for the Treatment of Behavioral Disturbances Associated with Dementia, Including Alzheimers Disease
In the fourth quarter of 2014, we announced the
top-line
data from
ITI-007-200,
a Phase 1/2 clinical trial designed to evaluate the safety, tolerability and pharmacokinetics of low doses of lumateperone in healthy geriatric subjects and in patients with dementia, including
AD. The completion of this study marked an important milestone in our strategy to develop low doses of lumateperone for the treatment of behavioral disturbances associated with dementia and related disorders. The
ITI-007-200
trial results indicate that lumateperone is safe and well-tolerated across a range of low doses, has linear- and dose-related pharmacokinetics and may improve cognition in the elderly. The most
frequent adverse event was mild sedation at the higher doses. We believe these results further position lumateperone as a development candidate for the treatment of behavioral disturbances in patients with dementia and other neuropsychiatric and
neurological conditions.
In the second quarter of 2016, we initiated Phase 3 development of lumateperone for the treatment of agitation
in patients with dementia, including AD. Our
ITI-007-201
trial is a Phase 3 multi-center, randomized, double-blind, placebo-controlled clinical trial in patients with a
clinical diagnosis of probable AD and clinically significant symptoms of agitation. In this trial, approximately 360 patients are planned to be randomized to receive 9 mg
ITI-007
or placebo in a 1:1 ratio
orally once daily for four weeks. This study includes a single interim analysis reviewed by an independent data monitoring committee, which will be used to assess the assumptions of variability and effect size. The primary efficacy measure is the
Cohen-Mansfield Agitation InventoryCommunity version, or
CMAI-C.
The
CMAI-C
is a well-validated
37-item
scale that measures
the ability of a drug to reduce overall frequency of
19
agitation symptoms, including aggressive behaviors. Individual items are rated by an expert clinician on a scale of 1 to 7 in which a score of 7 represents the most frequent for each item
assessed. The key secondary efficacy measure is the
CGI-S.
Other exploratory secondary endpoints include measures of other behavioral disturbances associated with dementia. Safety and tolerability are also
assessed in the trial.
Other Indications for Lumateperone
We are also pursuing clinical development of lumateperone for the treatment of additional CNS diseases and disorders. At the lowest doses,
lumateperone has been demonstrated to act primarily as a potent
5-HT2A
serotonin receptor antagonist. As the dose is increased, additional benefits are derived from the engagement of additional drug targets,
including modest dopamine receptor modulation and modest inhibition of serotonin transporters. We believe that combined interactions at these receptors may provide additional benefits above and beyond selective
5-HT2A
antagonism for treating agitation, aggression and sleep disturbances in diseases that include dementia, AD, Huntingtons disease and autism spectrum disorders, while avoiding many of the side
effects associated with more robust dopamine receptor antagonism. As the dose of lumateperone is further increased, leading to moderate dopamine receptor modulation, inhibition of serotonin transporters, and indirect glutamate modulation, these
actions complement the complete blockade of
5-HT2A
serotonin receptors. At a dose of 60 mg,
ITI-007
has been shown effective in treating the symptoms associated with
schizophrenia, and we believe this higher dose range will be useful for the treatment of bipolar disorder, depressive disorders and other neuropsychiatric diseases. Within the
ITI-007
portfolio, we are also
developing a long-acting injectable formulation to provide more treatment options to patients suffering from mental illness. 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 patients.
Given the potential utility for lumateperone and
follow-on
compounds to treat these additional indications, we may investigate, either on our own or with a partner, agitation, aggression and sleep disturbances in additional diseases that include autism spectrum
disorders, depressive disorder, intermittent explosive disorder,
non-motor
symptoms and motor complications associated with Parkinsons disease, and post-traumatic stress disorder. We hold exclusive,
worldwide commercialization rights to lumateperone and a family of compounds from Bristol-Myers Squibb Company pursuant to an exclusive license.
Other Product Candidates
We have a second major program called
ITI-002
that has yielded a portfolio of compounds that
selectively inhibits the enzyme phosphodiesterase type 1, or PDE1. On February 25, 2011, we (through our wholly owned operating subsidiary, ITI) and Takeda Pharmaceutical Company Limited, or Takeda, entered into a license and collaboration
agreement, or the Takeda License Agreement, under which we agreed to collaborate to research, develop and commercialize our proprietary compound
ITI-214
and other selected compounds that selectively inhibit
PDE1 for use in the prevention and treatment of human diseases. On October 31, 2014, we entered into an agreement with Takeda terminating the Takeda License Agreement, or the Termination Agreement, pursuant to which all rights granted under the
Takeda License Agreement were returned to us. On September 15, 2015, Takeda completed the transfer of the Investigational New Drug application, or IND, for
ITI-214
to us. We believe
ITI-214
is the first compound in its class to successfully advance into Phase 1 clinical trials. 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. Following the positive safety and tolerability results in our Phase 1 program, we have initiated our development program
for
ITI-214
for Parkinsons disease and commenced patient enrollment in the third quarter of 2017 in a Phase 1/2 clinical trial of
ITI-214
in patients with
Parkinsons disease to evaluate safety and tolerability in this patient population, as well as motor and
non-motor
exploratory endpoints.
Our pipeline also includes
pre-clinical
programs that are focused on advancing drugs for the treatment
of schizophrenia, Parkinsons disease, AD and other neuropsychiatric and neurodegenerative disorders. We are also investigating the development of treatments for disease modification of neurodegenerative disorders and
non-CNS
diseases.
We have assembled a management team with significant industry experience to lead the
discovery and development 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, including Nobel
laureate, Dr. Paul Greengard, one of our
co-founders.
20
Since inception, we have devoted substantially all of our efforts and resources to our research
and development activities. We have incurred significant net losses since inception. As of September 30, 2017, our accumulated deficit was $377.0 million. We expect to continue incurring substantial losses for the next several years as we
continue to develop our clinical and
pre-clinical
drug candidates and programs. Our operating expenses are comprised of research and development expenses and general and administrative expenses. Our corporate
headquarters and laboratory are located in New York, New York.
Recent Developments
On October 2, 2017 and October 5, 2017, we completed a public offering of common stock in which we sold 11,129,032 shares of common stock, which
included the exercise of the underwriters option to purchase an additional 1,451,613 shares, at an offering price of $15.50 per share for aggregate gross proceeds of approximately $172 million. After deducting underwriting discounts,
commissions and offering expenses, the net proceeds to us were approximately $162 million.
Results of Operations
The following discussion summarizes the key factors our management believes are necessary for an understanding of our financial statements.
Revenues
We have not
generated any revenue from product sales to date and we do not expect to generate revenues from product sales for at least the next 18 months. Our revenues for the three and nine months ended September 30, 2017 and 2016 have been from a
government grant. We have received and may continue to receive grants from U.S. government agencies and foundations.
We do not expect any
revenues that we may generate in the next several years to be significant enough to fund our operations.
Expenses
The process of researching and developing 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 clinical development of lumateperone for the treatment of schizophrenia, for the treatment of bipolar depression and for the treatment of agitation in patients
with dementia, including AD, consumes and 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.
Our
ITI-002
program has a compound,
ITI-214,
in Phase 1 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 initiated our development program for
ITI-214
for Parkinsons disease and commenced patient enrollment in the third quarter of 2017 in a Phase 1/2 clinical trial of
ITI-214
in patients with Parkinsons
disease to evaluate safety and tolerability in this patient population, as well as motor and
non-motor
exploratory endpoints. Our other projects are still in the
pre-clinical
stages, and will require extensive funding not only to complete
pre-clinical
testing, but to enter into 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 significant material adverse impact on the advancement of these other projects and on our results of
operations. Our operating expenses are comprised of (i) research and development expenses and (ii) general and administrative expenses. Our research and development costs are comprised of:
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internal recurring costs, such as labor and fringe benefits, materials and supplies, facilities and maintenance costs; and
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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.
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General and administrative expenses are incurred in three major categories:
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salaries and related benefit costs;
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patent, legal, professional and
pre-commercialization
costs; and
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office and facilities overhead.
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We expect that research and development expenses will
increase as we proceed with our Phase 3 clinical trials of lumateperone for the treatment of bipolar disorder and for the treatment of agitation in patients with dementia, including AD, and as we proceed with
21
increased manufacturing of drug product for clinical trials and
pre-commercialization
testing. We also expect that our general and administrative costs
will increase from prior periods primarily due to costs to perform
pre-product
commercialization activities and the increased costs associated with being a public reporting entity, which could include hiring
additional personnel. We granted options to purchase 487,121 shares of our common stock in 2016 and have granted options to purchase an additional 738,195 shares of our common stock in the nine months ended September 30, 2017. We also granted
time based restricted stock units, or RSUs, for 78,806 shares of our common stock in 2016 and time based RSUs for 154,922 shares of our common stock in the nine months ended September 30, 2017. We will recognize expense associated with these
RSUs and options over the next three years in both research and development expenses and general and administrative expenses. In the first quarter of 2017, we also granted performance based RSUs, which vest based on the achievement of certain
milestones that include (i) the submission of a new drug application with the U.S. Food and Drug Administration, or the FDA, (ii) the approval of the NDA by the FDA, or the Milestone RSU grants, and (iii) the achievement of certain
comparative shareholder returns against our peers, or the TSR RSU grants. The Milestone RSU grants were valued at the closing price on March 8, 2017. The RSUs related to the NDA submission will be amortized through December 31, 2018 based
on the probable vesting date. The amortization of the expenses of the RSUs related to the approval of the NDA will commence if and when the filing has been approved through the last day of the calendar year in which the milestone is achieved. The
TSR RSU grants were valued using the Monte Carlo Simulation method and will be amortized over the life of the RSU agreements which ends December 31, 2019. The Milestone RSU grants and the TSR RSU grants are target based and the ultimate awards,
if attained, could be the target amount or higher or lower than the target amount, depending on the timing or achievement of the goal. We are amortizing the expenses at the 100% targeted amount. We expect this
non-cash
expense to be substantial and affect quarter to quarter and year to date comparisons in the upcoming year. We expect to continue to grant stock options and other stock-based awards in the future,
which will increase our stock-based compensation expense in future periods.
The following table sets forth our revenues and operating
expenses for the three and nine months ended September 30, 2017 and 2016 (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
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Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
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2017
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|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
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(Unaudited)
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|
|
(Unaudited)
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|
Revenues
|
|
$
|
31
|
|
|
$
|
4
|
|
|
$
|
241
|
|
|
$
|
232
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development
|
|
|
18,472
|
|
|
|
23,918
|
|
|
|
52,490
|
|
|
|
72,653
|
|
General and Administrative
|
|
|
5,318
|
|
|
|
6,271
|
|
|
|
17,883
|
|
|
|
17,806
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total costs and expenses
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23,790
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|
|
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30,189
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|
|
|
70,373
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|
|
|
90,459
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|
|
|
|
|
|
|
|
|
|
|
|
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|
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Loss from operations
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|
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(23,759
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)
|
|
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(30,185
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)
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|
|
(70,132
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)
|
|
|
(90,227
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)
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Interest Income, net
|
|
|
885
|
|
|
|
752
|
|
|
|
2,565
|
|
|
|
2,118
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|
Income tax benefit (expense)
|
|
|
4
|
|
|
|
(832
|
)
|
|
|
2
|
|
|
|
(832
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(22,870
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)
|
|
$
|
(30,265
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)
|
|
$
|
(67,565
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)
|
|
$
|
(88,941
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)
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Comparison of Three and Nine Month Periods Ended September 30, 2017 and September 30, 2016
Revenues
Revenues increased for the three
and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016 by approximately $26,000 and $8,000, respectively, due to revenue from a government grant.
Research and Development Expenses
Research and development expenses decreased to $18.5 million for the three month period ended September 30, 2017 as compared to
$23.9 million for the three month period ended September 30, 2016, representing a decrease of approximately 23%. This change is due primarily to a decrease of approximately $5.7 million of costs associated with outside clinical and
non-clinical
costs and an increase of approximately $282,000 of internal costs in the three month period ended September 30, 2017 over the three month period ended September 30, 2016. In the three months
ended September 30, 2017, the $18.5 million of research and development costs were comprised primarily of development costs for lumateperone in patients with bipolar depression and dementia, including AD, of approximately
$7.1 million, clinical trials and development costs for lumateperone for the treatment of schizophrenia of approximately $2.8 million, manufacturing expense of approximately $2.3 million and other clinical and
non-clinical
expenses. In the three months ended September 30, 2016 the majority of the $23.9 million of research and development costs were related to our development program for lumateperone for patients
with schizophrenia that included $8.1 million of manufacturing expenses and approximately $4.8 million of expenses for our second Phase 3 schizophrenia trial. In addition there were approximately $3.7 million of development costs for
lumateperone in patients with bipolar depression and dementia, including AD, and other clinical and
non-clinical
expenses. Amounts payable to external parties comprised a significant portion of our research
and development costs. In the three months ended September 30, 2017, we incurred approximately $15.1 million of costs to external parties who performed clinical trial related activities, including manufacturing and testing
22
lumateperone, as compared to $20.9 million in the three month period ended September 30, 2016. Of these external costs, approximately $14.4 million in the three months ended
September 30, 2017 and approximately $20.7 million in the three month period ended September 30, 2016 were for lumateperone related projects. The remaining external costs for each of these periods were spent on other projects.
Internal costs are comprised primarily of costs relating to labor, fringe benefits, materials, stock based compensation, supplies and facilities and maintenance and were approximately $3.2 million and $3.0 million in the three months ended
September 30, 2017 and 2016, respectively.
Research and development expenses decreased to $52.5 million for the nine month
period ended September 30, 2017 as compared to $72.7 million for the nine month period ended September 30, 2016, representing a decrease of approximately 28%. This change is due primarily to a decrease of approximately
$21.8 million of costs associated with outside clinical and
non-clinical
costs, partially offset by an increase of approximately $1.6 million of internal costs in the nine month period ended
September 30, 2017 over the nine month period ended September 30, 2016. In the nine months ended September 30, 2017, the $52.5 million of research and development costs were comprised primarily of development costs for
lumateperone for the treatment of schizophrenia of approximately $13.1 million, development costs for lumateperone in patients with bipolar depression and dementia, including AD of approximately $15.0 million, manufacturing expense of
approximately $8.1 million and other clinical and
non-clinical
expenses. In the nine months ended September 30, 2016 the majority of the $72.7 million of research and development costs were
related to the second Phase 3 trial of lumateperone in patients with schizophrenia of approximately $29.7 million, development costs for lumateperone in patients with bipolar depression and dementia, including AD, of approximately
$13.2 million, manufacturing expense of approximately $9.5 million and other clinical and
non-clinical
expenses. Amounts payable to external parties comprised a significant portion of our research
and development costs. In the nine months ended September 30, 2017, we incurred approximately $41.5 million of costs to external parties who performed clinical trial related activities, including manufacturing and testing lumateperone, as
compared to $63.3 million in the nine month period ended September 30, 2016. Of these external costs, approximately $40.1 million in the nine months ended September 30, 2017 and approximately $62.8 million in the nine month
period ended September 30, 2016 were for lumateperone related projects. The remaining external costs for each of these periods were spent on other projects. Internal costs are comprised primarily of costs relating to labor, fringe benefits,
materials, stock based compensation, supplies and facilities and maintenance and were approximately $11.0 million and $9.4 million in the nine months ended September 30, 2017 and 2016, respectively.
As development of lumateperone progresses, we anticipate costs for lumateperone to increase due primarily to ongoing and planned clinical
trials relating to our lumateperone programs in the remainder of 2017 and in the next several years as we conduct Phase 3 and other clinical trials. 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 the creation of an inventory of drug product in anticipation of possible
FDA approval. As of September 30, 2017, we employed 30 full time personnel in our research and development group as compared to 28 full time personnel in our research and development group at September 30, 2016. We expect to hire
additional staff as we increase our development efforts and grow our business in the upcoming years.
We currently have several projects,
in addition to lumateperone, that are in the research and development stages, including in the treatment of neurological and neurodegenerative diseases, including Parkinsons and AD, among others and pain, substance use disorders and related
psychiatric comorbidities including depression and anxiety. 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 amounts discussed 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:
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completion of extensive
pre-clinical
laboratory tests, animal studies, and formulation studies in accordance with the FDAs Good Laboratory Practice, or GLP, regulations;
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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;
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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;
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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;
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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
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FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.
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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
filed with the SEC on March 1, 2017, as updated from time to time in our other periodic and current reports filed with the SEC.
General and Administrative Expenses
General and administrative expenses decreased for the three month period ended September 30, 2017 as compared to the three month period
ended September 30, 2016 by approximately $953,000, representing a decrease of approximately 15%. The decrease is primarily the result of decreased stock option expense related to forfeited stock options and RSUs in the third quarter 2017
and legal fees incurred in the third quarter of 2016 for costs relating to the license of certain intellectual property by us to our wholly-owned subsidiary ITI Limited which was formed in the third quarter of 2016. Salaries, bonuses and related
benefit costs for our executive, finance and administrative functions for the three months ended September 30, 2017 and 2016 constituted approximately 59% and 55% of our total general and administrative costs, respectively. The next major
categories of general and administrative expenses are accounting, patent costs and, to a lesser extent, facilities and general office-related overhead.
General and administrative expenses increased for the nine month period ended September 30, 2017 as compared to the nine month period
ended September 30, 2016 by approximately $76,000, or 0.4%. The increase is primarily the result of professional fees in addition to increased labor and related costs, offset partially by lower
pre-commercialization
costs and lower stock option expense related to forfeited stock options and RSUs in the third quarter of 2017. Salaries, bonuses and related benefit costs for our executive, finance
and administrative functions for the nine months ended September 30, 2017 and 2016 constituted approximately 63% and 62%, respectively, of our total general and administrative costs. The next major categories of expenses are accounting, patent
costs, professional fees and, to a lesser extent, facilities and general office-related overhead. We expect all general and administrative costs to increase as we expand our operations and conduct
pre-commercialization
activities.
Liquidity and Capital Resources
Through September 30, 2017, we provided funds for our operations by obtaining approximately $718 million of cash primarily through
public and private offerings of our common stock and other securities, grants from government agencies and foundations and payments received under the terminated Takeda License Agreement. We do not believe that grant revenue will be a significant
source of funding in the near future. On March 11, 2015, we completed a public offering of 5,411,481 shares of our common stock for aggregate gross proceeds of approximately $129.9 million and net proceeds of approximately
$121.8 million. On September 28, 2015, we completed an additional public offering of 7,935,000 shares of our common stock for aggregate gross proceeds of approximately $345.2 million and net proceeds of approximately
$327.4 million.
In addition, on October 2, 2017, we completed a public offering of 9,677,419 shares of our common stock for
aggregate gross proceeds of approximately $150 million and net proceeds of approximately $140.6 million. On October 5, 2017, the underwriters exercised in full their option to purchase an additional 1,451,613 shares. All of the shares
in the offering were sold by the Company, with gross proceeds to the Company of approximately $172 million from the offering of an aggregate of 11,129,032 shares and net proceeds of approximately $162 million, after deducting underwriting
discounts and commissions and estimated offering expenses.
As of September 30, 2017, we had a total of approximately
$328.1 million in cash and cash equivalents and
available-for-sale
investment securities, and approximately $11.9 million of short-term liabilities consisting
entirely of liabilities from operations. In the nine months ended September 30, 2017, we spent approximately $55.9 million in cash for operations and equipment and we received approximately $2.6 million of interest income. We reduced
working capital by approximately $56.1 million for the nine months ended September 30, 2017. The use of cash was primarily for conducting clinical trials and
non-clinical
testing, including
manufacturing related activities and funding recurring operating expenses.
24
During the fourth quarter of 2017, subject to the timing of clinical trials, manufacturing and
other development activities, we expect to spend up to $35 million. We expect these expenditures to be due primarily to the development of lumateperone in patients with schizophrenia, behavioral disturbances in dementia, bipolar disorder and
depressive disorders, our
ITI-007
long acting injectable development program through
pre-clinical
and early clinical development, research and preclinical development of
our other product candidates, the continuation of manufacturing activities in connection with the development of lumateperone, recurring expenses and costs to produce, develop and validate materials to be used in clinical and
non-clinical
studies related to lumateperone, expenses associated with the continued clinical development of our PDE program, including
ITI-214,
and expenses associated with
our other development programs,
pre-commercialization
activities and general operations. We expect that cash expenditures will continue to increase after 2017 as we further expand the lumateperone
clinical stage programs; the
ITI-007
long acting injectable development program through
pre-clinical
and early clinical development; research, preclinical and clinical
development of our other product candidates; manufacturing and
pre-commercial
activities in connection with the development of lumateperone and the early stage
pre-commercial
launch activities for lumateperone. We believe that our existing cash and cash equivalents and investments will be sufficient to fund our operating expenses and capital expenditure requirements
through the middle of 2020.
We will require significant additional financing in the future to continue to fund our operations. We believe
that we have the funding in place to complete the additional clinical and
non-clinical
trials, manufacturing and
pre-commercialization
activities needed for potential
regulatory approval and commercialization of lumateperone in patients with schizophrenia. With the remaining proceeds from our public offerings in March and September 2015 and October 2017, we believe that we have the funds to complete our
ongoing clinical trials of lumateperone in bipolar disorder as a monotherapy and as an adjunctive therapy with lithium or valproate and our ongoing clinical trial of
ITI-007
for the treatment of agitation in
patients with dementia, including AD. We also plan to fund additional clinical trials of lumateperone for the treatment of behavioral disturbances in dementia; preclinical and clinical development of
ITI-007
long acting injectable development program; additional clinical trials of lumateperone; continued clinical development 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 to obtain regulatory approval for lumateperone in patients with dementia, including AD,
for further development of lumateperone in patients with bipolar disorder, depressive disorders and other indications, and for development of our other product 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 the Takeda License Agreement. These losses have resulted in significant cash used in operations. For the nine months ended
September 30, 2017, we used net cash in operating activities and purchases of equipment of approximately $55.9 million and expect to use additional cash of up to $35 million during 2017. While we have several research and development
programs underway, 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 and our other product candidates, we expect the amount of cash to be used to fund operations to increase over the next several years.
With the termination of the Takeda License Agreement in October 2014, we are responsible for the costs of developing
ITI-214.
On September 15, 2015, Takeda completed the transfer of the IND for
ITI-214
to us. We intend to pursue the development of our PDE1 program, including
ITI-214
for the treatment of several CNS and
non-CNS
conditions. We anticipate a moderate increase in our operating expenses related to our PDE development programs. Following
the positive safety and tolerability results in our Phase 1 program, we have initiated our development program for
ITI-214
for Parkinsons disease and commenced patient enrollment in the third quarter of
2017 in a Phase 1/2 clinical trial of
ITI-214
in patients with Parkinsons disease to evaluate safety and tolerability in this patient population, as well as motor and
non-motor
exploratory endpoints. We expect these expenses to increase for 2018 and beyond.
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 September 2, 2016, we filed a universal shelf registration statement on
Form S-3,
which was declared effective
by the SEC on September 14, 2016, on which we registered for sale up to $350 million of any combination of our common stock, preferred stock, debt securities, warrants, rights, purchase contracts and/or units from time to time and at
prices and on terms that we may determine. After the public offering in October 2017, approximately $178 million of securities remain available for issuance under this shelf registration statement. This registration statement will remain in
effect for up to three years from the date it was declared 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,
25
including, but not limited to, 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. In addition, any 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
pre-clinical
stage 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 not been adversely impacted by the problems in the credit markets that have existed over the last several years, but there can be no assurance that our
investment portfolio will not be adversely affected in the future.
In 2014, we entered into a long-term lease, which was amended in
December 2015, for 16,753 square feet of useable laboratory and office space located at 430 East 29th Street, New York, New York 10016. Due to the amortization of total lease payments, we have recognized $3.0 million of deferred rent
through September 30, 2017. We occupied these facilities as our headquarters in March 2015, replacing our previous laboratories and offices. The lease, as amended, has a term of 12 years. We expect that our facility related costs will
increase moderately from year to year as a result of leasing this facility.
Off-Balance
Sheet Arrangements
We do not have any
off-balance
sheet arrangements.
Contractual Obligations and Commitments
Total contractual obligations as of September 30, 2017 are summarized in the following table (in thousands):
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Payments Due By Period
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Total
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Less than 1
Year
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1-3
Years
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4-5
Years
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More than 5
Years
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Operating Lease Obligations
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$
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15,311
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$
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1,446
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$
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4,605
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$
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3,305
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$
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5,955
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The table of Contractual Obligations and Commitments does not reflect that, under the License Agreement with
BMS, we may be obligated to make future milestone payments to BMS totaling $12 million; to make other future milestone payments to BMS for each licensed product of up to an aggregate of approximately $14.75 million; to make tiered single
digit percentage royalty payments on sales of licensed products; and to pay BMS a percentage of
non-royalty
payments made in consideration of any sublicense.
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
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, 2016 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, 2017.
26
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 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 revenue recognition, stock-based compensation and 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. See
Note 2,
Summary of Significant Accounting Policies
, in the notes to our unaudited financial statements for the three and nine months ended September 30, 2017, included in Part 1, Item 1 of this quarterly report on Form
10-Q
for information on recent accounting pronouncements.
Certain Factors That May Affect Future Results of
Operations
The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can
better understand a companys 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, future revenues,
uses of cash, cash equivalents and investment securities, capital requirements and the need for additional financing; our beliefs about the extent to which the results of our clinical trials to date support an NDA filing for lumateperone for the
treatment of schizophrenia; our belief that the toxicity findings observed in nonclinical animal toxicology studies of lumateperone are not indicative of a safety risk for humans; our ability to successfully complete our long-term safety study and
to file an NDA with the FDA; the initiation, cost, timing, progress and results of our development activities,
pre-clinical
studies and clinical trials; the timing of and our ability to obtain and maintain
regulatory approval of our 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 our current and future product candidates; the election by any collaborator to pursue research, development and commercialization activities; our ability to obtain future reimbursement and/or milestone payments from our collaborators;
our ability to obtain and maintain intellectual property protection for our product candidates; our ability to successfully commercialize our product candidates; the performance of our third-party suppliers and manufacturers and our ability to
obtain alternative sources of raw materials; the potential outcome and cost of litigation; our ability to obtain additional financing; our use of the proceeds from our securities offerings; and our ability to attract and retain key scientific or
management 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 managements 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 include, but are not limited
to, those set forth under the heading Risk Factors in our most recent Annual Report on Form
10-K,
as updated 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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