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Good morning. Welcome to the Cerevel Therapeutics Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask a question during the Q&A portion of the call. Please note that this call maybe recorded.
I will now hand to Mr. Matt Calistri, Vice President of Corporate Strategy and Investor Relations.
Thank you. Good morning, everyone. We appreciate you joining us for our third quarter 2021 results call. On today's call, you will be hearing from Dr. Tony Coles, our Chairperson and Chief Executive Officer; Dr. Ray Sanchez, our Chief Medical Officer; Dr. John Renger, our Chief Scientific Officer; and Mark Bodenrader, our Interim Chief Financial Officer
Please refer to our press release from this morning detailing our Q3 performance as well as our updated corporate presentation, both of which are available on our website.
I would like to remind you that we will be making forward-looking statements that reflect our current views related to our financial performance, future events and industry and market conditions, as well as forward-looking statements, including the potential attributes and benefits of our product candidates and the format and timing of our product development activities and clinical trials. We strongly encourage you to review the information that we filed with the SEC regarding specific risks and uncertainties.
I will now hand it over to Dr. Tony Coles, Chairperson and CEO of Cerevel to provide an overview of our achievements and outlook.
Thanks, Matt, and good morning, everyone. Thank you for joining us. Earlier this year, we announced top line results from our Phase 1b trial of CVL-231, our M4-selective positive allosteric modulator or PAM in schizophrenia. That compelling data represented our first major step toward realizing our aspiration of becoming the premier neuroscience company.
In the early part of the third quarter, we secured $350 million of follow-on offering and redeemed our outstanding public warrants. Now, we're well equipped with the people, the capital and the momentum to execute on our programs and bring much needed medicines to patients as rapidly as possible.
Last month, we held a virtual R&D event where we discussed CVL-871, a D1/D5 partial agonist in development for dementia-related apathy, and released additional data for CVL-231. These are just two of the many programs in our broad portfolio, all of which leverage our deep understanding of neurocircuitry and receptor subtype selectivity to drive therapeutic benefit, while minimizing side effects.
Specifically, we are advancing CVL-231rapidly into Phase 2. We shared the broad outlines of our development program during our R&D event a few weeks ago, which Ray will review again in just a moment. And we'll provide additional details on the timing and design of that program by mid to late first quarter of next year.
We also expect additional data readouts in the next few years across other programs in our pipeline. We anticipate two data readouts for darigabat in 2022, with data from our Phase 1 acute anxiety trial, now expected by the end of the first quarter of 2022. And the readout from our Phase 2 focal epilepsy trial in the second half of the year.
Also in the second half of 2022, we expect to face to readout of CVL-871 in dementia-related apathy. And in 2023, of course, we expect data from our Phase 3 program for tavapadon in early and late-stage Parkinson's.
In addition, we have a robust early stage pipeline, including multiple programs in development, for substance use disorder and major depressive disorder. We also have state of the art laboratories and discovery capabilities at our brand new Cambridge Crossing facility, where we intend to identify new neuroscience drug targets, including some with disease modifying potential. With the depth of a pipeline that spans all stages of development, we're well positioned to deliver a number of important catalysts in 2022, 2023 and beyond.
Now, let me ask Dr. Ray Sanchez, our Chief Medical Officer to provide the latest updates on our clinical development efforts. Ray?
Thank you, Tony. And good morning to all of you. Today I'll be reviewing our late stage programs, starting with CVL-231 in development for the treatment of schizophrenia. CVL-231 is designed as a once daily oral medication without the need for titration that is highly selective for M4over other muscarinic receptors. We believe this selective targeting enables CVL-231 to drive antipsychotic effect while avoiding serious GI extrapyramidal, akathisia and metabolic side effects that are commonly observed with non-selective muscarinic agents and/or approved antipsychotic agents.
In June of this year, we released positive top line data from our Phase 1b trial of CVL-231. In this trial, we enrolled 81 subjects randomized in a one to 1:121 [ph] ratio to receive 30 milligrams qDay or 20 milligrams BID of CVL-231 or placebo. Both doses of CVL-231 demonstrated clinically meaningful and statistically significant anti psychotic effects, with no meaningful differences in gastrointestinal side effects, extrapyramidal symptoms or weight gain compared with placebo.
The 30 milligram once daily group demonstrated an absolute improvement versus baseline of 19.5 points, while the 20 milligram twice daily cohort showed an improvement of 17.9 points on the PANSS total score. In addition, relative to placebo, both treatment groups had statistically significant reductions of 12.7 and 11.1, respectively.
To put this into context, previously approved medications have historically shown a 10 to 15 point or greater improvement relative to baseline or a 5 to 10 point improvement on a placebo adjusted basis. Our trial results were further supported by clinically meaningful improvements in the PANSS positive and PANSS negative subscales, as well as the CGIS.
The safety and tolerability data from this trial were also very encouraging. CVL-231 was not associated with extrapyramidal side effects, akathisia or weight gain. Treatment emerging adverse event rates were similar across all three arms, and very low rates of gastrointestinal AEs were observed.
Importantly, there were no discontinuations related to cardiovascular or gastrointestinal side effects. As expected, we observed modest asymptomatic elevations in heart rate and blood pressure with CVL-231 which attenuated over the six weeks of treatment and were not clinically significant. We will continue to monitor heart rate and blood pressure in our Phase 2 program.
Given the strong anti-psychotic activity and the favorable tolerability profile observed in the Phase 1b trial, we are rapidly advising - advancing to CVL-231into Phase 2 development for the treatment of schizophrenia. At our R&D event on October 7th, we presented new pharmacokinetic and PET receptor occupancy data, which are essential to informing our next steps for CVL-231. We plan to present additional PK/PD data at the Annual Meeting of the American College of Neuropsychopharmacology in December.
Based on the data we have seen today, we will be pursuing once daily doses without titration in our Phase 2 program. The selected doses will include the 30 milligram once daily dosing regimen that demonstrated impressive results in the Phase 1b trial.
Our plan includes one or more adequately powered placebo controlled Phase 2b trials to fully explore the dose range for CVL-231. The trial design will follow established precedent for drug development and schizophrenia, which includes six weeks of inpatient treatment, a patient profile similar to Part B of our Phase 1b trial, and a primary endpoint of change from baseline on the PANSS total score. We are looking forward to providing the full details of the Phase 2 program by mid to late first quarter of next year.
The next expected data readout for Cerevel [ph] will be for darigabat, our alpha-2/3/5 selective GABAA receptor positive allosteric modulator or PAM in acute anxiety. Darigabat is currently being studied in a Phase 1, randomized positive and placebo controlled proof of principle trial in healthy volunteers.
We can now say that we expect to have some data for this trial by the end of the first quarter of next year. Those results will inform how we advance this compound in one or more anxiety related indications.
We're also dosing darigabat in our Phase 2 global proof of concept trial and focal epilepsy, known as the REALIZE trial, as well as its corresponding open-label extension trial. Data in focal epilepsy continues to be expected in the second half of 2022.
Now to run out the data discussion of our late stage programs, our Phase 3 global TEMPO program for tavapadon in Parkinson's disease is progressing nicely. We continue to dose in all three of the Phase 3 trials, TEMPO-3 in late-stage Parkinson's, and TEMPO-1 and 2 in early-stage Parkinson's. In addition, we are dosing both rollover and de novo patients in TEMPO-4, our 58 week open label extension trial. We expect data from TEMPO-3 in the first half of 2023 and data from TEMPOs 1 and 2 in the second half of 2023.
Now, that I've reviewed the updates to our three lead clinical programs, I will like to turn it over to Dr. John Renger, our Chief Science Officer to provide updates on the rest of our pipeline. John?
Thank you, Ray. Good morning, everyone. During our R&D event last month, we discussed CVL-871, our D1/D5 dopamine receptor partial agonist in Phase 2 development for the treatment of dementia related apathy. Apathy is among the most common neuropsychiatric comorbidities associated with dementias and remains a devastating condition without a currently approved treatment option.
Our 75 subject randomized Phase 2a trial is designed to test two doses of CVL-871, 3 milligrams, and 1 milligram once daily, relative to placebo over 12 weeks of treatment. We will be assessing patients at a range of established apathy measures to understand the overall therapeutic potential of CVL-871. And to determine the most appropriate fit for purpose metric to evaluate changes in this condition.
We have now dosed the first patient in this trial, and we anticipate clinical results to be available in the second half of next year. In June, we received Fast Track Designation for CVL-871 in the treatment of dementia related apathy, which has the potential to enable early and more frequent interactions with the FDA, as well as eligibility for rolling NDA submission in priority review. We're looking forward to interacting closely with the agency and determining the best path forward for developing a treatment in this novel indication.
In addition, we're advancing a number of earlier stage clinical programs, including CVL-936, our D3 preferring dopamine receptor antagonists for the treatment of opioid use disorder, CVL-354, or Kappa Opioid Receptor Antagonist in development for substance use disorder and major depressive disorder or MDD and CVL-047, our selective PDE4 inhibitors in development for schizophrenia and MDD.
We're also building out a robust drug discovery engine at our research labs in Cambridge Crossing. With multiple discovery stage programs ongoing, we're leveraging our differentiated understanding of neurocircuitry and world class chemistry to develop and explore potential of highly sophisticated small molecules.
We believe this research engine will feel a regenerative pipeline of novel therapeutics for many years to come. And we're looking forward to keeping you updated on our ongoing progress.
I'll now turn it over to Mark Bodenrader, our Interim Chief Financial Officer to review our financial performance for the third quarter. Mark?
Thank you, John. Good morning, everyone. And thank you for joining today's call. Please refer to this morning's press release for the full details of our financial update.
For the third quarter, total operating expenses were approximately $55 million, which includes R&D expense of $40 million and G&A expense of $14 million. As expected, total operating expenses for the third quarter grew over prior quarters, which is primarily driven by the ramp up of our clinical trials, and higher public company G&A costs as we grow our business.
Relative to the - relative to the third quarter last year, R&D expense increased by approximately $16 million. This increase was primarily driven by the advancement of our leading early stage programs, an increase in spending as we build out our laboratories in Cambridge Crossing, an increase in infrastructure costs to support the progress of our pipeline.
R&D expense for the third quarter also included $2.5 million of equity based compensation expense, relative to $1 million for the third quarter last year. We expect R&D expenses to continue to increase as we advance our clinical programs.
G&A expense for the third quarter was $14 million, compared to $10 million for the same period in the prior year. G&A expense for the third quarter also included equity based compensation expense of approximately $3.6 million versus $2.4 million for the third quarter last year. We continue to expect G&A expense to increase over the coming quarters, as we support the growth of the company including the progression of our R&D programs in our public company infrastructure.
As a September 30th, our cash and cash equivalents were $670 million which includes proceeds received from our follow on offering in July, and proceeds from the redemption and exercise of our public warrants. With our strong balance sheet position, we're prepared to continue to advance our lead programs, including CVL-231, darigabat, and tavapadon, while also pursuing earlier stage clinical programs in drug discovery initiatives. And with multiple value creation opportunities expected over the next three years, we expect our current cash position to fund our operations into 2024.
I will now turn the call over to Tony for concluding remarks.
Thanks, Mark. Well, as you can see, we're advancing our broad pipeline, and building what we hope will become the premier neuroscience company. Neuroscience we know is the next great frontier of medicine and Cerevel is at the forefront. We expect multiple important data readouts in the next few years and are excited about the potential we have in our pipeline to transform the lives of patients and their caregivers.
Thank you for joining us this morning. I also want to thank our employees who, without whom we certainly could not do what we do without your passion, your devotion and your hard work. And I want to express my deep appreciation for the participants and investigators in all of our clinical trials for your continued contribution to the development of these much needed medicines.
With that operator, we can now open the floor for questions.
Thank you. [Operator Instructions] Our first question comes from Michael Yee with Jefferies. Your line is open.
Hi. This is Ben [ph] on for Mike. Thanks for taking the question. Can you please give a little bit more color on the upcoming anxiety data design, and powering [ph] assumptions? I think in the prepared remarks, you emphasized that you'll be presenting some data in the first quarter, which I thought probably was an interesting comment.
What are you planning to report? And what would be considered promising in a Phase 1 anxiety trial? And as a follow up, can you put that into context with J&Js prior data? Thank you.
Sure. Thank you for the question. Ray, why don't you - why don't you take that question.
Thank you, Tony. Thank you for that question. So as you know, we are using the carbon dioxide inhalation challenge model to understand the potential signal of our use of darigabat in treating panic symptoms. This is a model that's been sensitive to drugs that have been used to treat anxiety disorders, including benzodiazepine and the SSRIs [ph] And our hope is that we will be delivering the data readout of this trial by the end of the first quarter.
As you know, it's - this is a trial that is being conducted in healthy volunteers in the Centre for Human Drug Research in the Netherlands. It's a two period, two sequence crossover design that has three cohorts and looks at 50 milligrams a day, 15 milligrams a day, and also 2 milligrams of extended alprazolam, a day as well. And the reason for including the alprazolam treatment arm is that was also used in the orexin one inhibitor program that was conducted by J&J. So it will give us an opportunity to really juxtapose the data and better understand how we fare on the panic symptoms checklist, which traditionally, a clinically meaningful outcome has been two to three points, placebo adjusted on the scale, alprazolam and the [indiscernible] trial showed a 3.1 placebo adjusted difference.
So we will use the collective information working with our advisors who are familiar with this approach, this design in this population to make a decision on our next steps in treating anxiety.
Thanks, Ray. And I'm sure everyone did it here. But we are bringing our guidance in for top line data to the first quarter instead of the first half of next year. So stay tuned. We expect to have some data here off very shortly. Thank you, Ray. Operator, we'll take the next question.
Our next question comes from Paul Matteis with Stifel. Your line is open.
Great, thanks so much for taking the questions. A couple on darigabat, as well. I was wondering if you could just kind of remind us about the powering of this study and then kind of separately sort of taking a step back right, the hope with the alpha-1 selectivity hypothesis is that - this can give you sort of the good of the [indiscernible] in class without the bad.
So in this study specifically what are you expecting to see from the comparator arm in terms of things like sedation rates, evidence of tolerance or withdrawal? And what do you see as kind of the clearest cut avenues in this trial to sort of prove out the alpha1-1 selectivity hypothesis. Thanks so much.
Okay, thanks. Thank you, Paul. Jay [ph], if you if you would actually take the alpha-1 selective - selectivity piece. I know that we have gone through this before. But I think let's just set the context for Paul's question, talk a little bit about the mechanistic rationale darigabat might be efficacious. And then Ray, if your would answer the questions about powering of this trial, and then the expected side effect profile that we'd be looking for. So first of the mechanism, Jay.
Sure. Thank you, Tony. And thanks for the question, Paul. Good to hear from you. Yeah, so as you may remember, the intent of having an alpha-1 sparing alpha 235 compound is to be able to enhance inhibition in the neurocircuits that underlie both epilepsy, and that's why we're looking at vocal onset epilepsy in a Phase 2 study. And as you know, that is the more appropriate study to look for tolerance. And that is part of that trial design. And so we believe that alpha-1 sparing will allow us to show that we don't have the tolerance as seen with alpha-1 directed compounds.
Also, as you mentioned, you know, the sedation piece, so we know that alpha-1 is expressed in the circuits in the brain that underlie sedation. And so by avoiding that, we have actually been able to go to very high receptor occupancies, including in clinical setting, and not see the sedation.
And so what we want to do is demonstrate that 235 plays a role in the circuitry that underlies panic in anxiety, but avoid that time, that very common side effects that are seeing what Benzo [ph] use, which is the dose limiting sedation that seen when you dose to even moderate levels of receptor occupancy. So even 20% receptor occupancy, you can see comparing levels of motor control and sedation.
And so what we want to do is demonstrate the ability to have that panic benefit, avoid any of the cognitive, the motor coordination, or sedating effects that are commonly seen with non-selected visit [ph] as it means. And so with that, I'll turn it back to Tony.
Ray, just before I take the question, Ray, if you would talk a little bit about the power of the study that was one part of Paul's question and any of the relative clinical commentary you'd like to make?
Right, right. So Paul, as you know, this is a proof of principle trial that is fairly small, it's got three cohorts of 18 healthy volunteers in each cohort. It's not powered to show any differences, we'll look at, of course, the confidence intervals and the like. Because the treatment duration is so short, that issues like withdrawal, and tolerance in the life pop up will not be readily evaluated, just given the nature of the design.
But what we do want to see is on the Panic Symptoms Checklist relative to alprazolam is really what that placebo just the difference shows, in the minimum effective dose of 15 milligrams and the top dose of 50 milligrams a day. And then, of course, looking for some of the adverse events, or some of the side effects that - that John articulated, which are usually as you know, driven by alpha-1.
One of the things that we also want to understand is sedation versus somnolence. As you know, historically, we've seen some somnolence in the minority of participants with darigabat, but we have not seen sedation, you know, the two are quite different and are labeled quite differently. So we'll also be looking for that in the appraisal [ph] and treatment group versus the other, the other treatment groups darigabat.
Great, thanks so much for the detailed answer.
Thank you, Paul.
Thank you, Paul. Thanks for the questions. Operator, we'll take the next question.
There are no other questions in the queue. I'd like to turn back to Tony for any closing remarks.
Okay. Well, guys, thank you for joining us this morning. It's certainly been an eventful year, and a very productive quarter with both the capital raise and the earlier year announcement of the 231 results. We're making great progress across the entire pipeline and 2022 should be a very important year for the company as well, just given some of the data readouts we've got.
We've got a terrific team, as you can see, through today's call, and we look forward to bringing further updates as the weeks and months progress. Thanks for joining us today. Enjoy your day and happy into the year. Take care.
This concludes today's conference call. Thank you for participating. You may now disconnect.