Minerva Neurosciences, Inc. (NERV)·Q2 2014 Earnings Summary

Executive Summary

• Q2 2014 was a transitional quarter: zero revenue, a large GAAP net loss driven by non‑cash stock-based compensation tied to IPO-related vesting and debt discount amortization; cash was just $0.5M at quarter end prior to July financing closes .
• Minerva completed its IPO and two private placements in July (post‑Q2), raising ~$29.9M net and $19.7M gross from JJDC; management expects proceeds to fund operating requirements through end of 2015 .
• Clinical execution advanced: MIN‑101 once‑daily formulation study in progress and Phase 2b submission planned by year‑end 2014; MIN‑202 multiple Phase 1 programs underway with top‑line readouts targeted by year‑end 2014 .
• No financial guidance (revenue, margins, EPS) was issued; narrative catalysts are pipeline milestones and post‑IPO balance sheet de‑risking rather than operational beats/misses .

What Went Well and What Went Wrong

What Went Well

• IPO and strategic financing closed in July, including JJDC’s 18% stake, positioning the company to fund development through 2015 (“sufficient to fund its operating requirements through the end of 2015”) .
• Pipeline momentum: “significant progress toward the realization of our long‑term goal…” with MIN‑101 advancing toward Phase 2b and sleep-promoting effects observed in Phase 2a; MIN‑202 progressing across Phase 1b/MAD studies .
• Organizational build: appointment of VP Finance/CAO to strengthen reporting capability amid the transition to public company status .
  • Quote: “The proceeds from the offering will enable us to move the development program for our lead drug candidate, MIN‑101, through Phase 2 development…” — Dr. Rogerio Vivaldi (CEO) .

What Went Wrong

• GAAP net loss expanded sharply to $19.4M (vs. $0.4M) as non‑cash stock‑based compensation ($13.0M R&D; $1.5M G&A) and $1.7M amortization related to convertible promissory notes hit the quarter .
• Minimal cash at quarter-end ($0.5M) before financings closed in July, highlighting near‑term liquidity strain intra‑quarter .
• Internal control weaknesses disclosed (segregation of duties, disclosure controls, risk assessment) as Minerva scaled public reporting; management remediation in progress .

Financial Results

Income Statement – Quarterly Comparison

Notes: Q2 2014 includes non‑cash stock‑based compensation ($13.0M R&D; $1.5M G&A) and ~$1.7M non‑cash amortization of debt discount .

Income Statement – First Half (Six Months Ended)

Balance Sheet Snapshots

Estimates vs Actuals – Q2 2014

Consensus estimate data via S&P Global was unavailable for Q2 2014 due to a rate limit; please note unavailability for this period [SPGI rate-limit error observed].

Segment and KPI Breakdown

• No revenue segments; company is pre‑commercial with zero revenue and reports consolidated operating expenses and pipeline progress .
• Operational KPIs highlighted by management are clinical milestones (MIN‑101 once‑daily formulation; MIN‑202 Phase 1/1b timelines) rather than financial KPIs .

Guidance Changes

No numeric guidance for revenue, margins, OpEx, OI&E, tax rate, or dividends was provided .

Earnings Call Themes & Trends

Note: A Q2 2014 earnings call was announced, but we did not locate a published transcript; management hosted the webcast at 4:30 p.m. EDT on Aug 7, 2014 .

Management Commentary

• “During the first half of 2014 we made significant progress toward the realization of our long‑term goal of improving the standard of care… In July, Minerva successfully completed an initial public offering…” — Dr. Rogerio Vivaldi, CEO .
• “The proceeds from the offering will enable us to move the development program for our lead drug candidate, MIN‑101, through Phase 2 development, while continuing to advance our earlier stage programs…” — Dr. Rogerio Vivaldi .
• Q2 Business Highlights and Upcoming Milestones enumerated: IPO close, JJDC investment, MIN‑202 license agreement, and 2014 clinical readout and submission timelines .

Q&A Highlights

• No Q2 2014 call transcript was found in SEC or investor materials; management indicated webcast details in the press release .
• As such, no recorded Q&A clarifications are available for this quarter.

Estimates Context

• We attempted to pull S&P Global consensus for Q2 2014 EPS and revenue, but data was unavailable due to a rate limit; given Minerva’s pre‑revenue status and early public listing (effective 6/30/2014), Street coverage may have been limited [SPGI rate-limit error observed] .
• Actuals: Revenue $0; Diluted EPS $(2.55) were driven by non‑cash stock compensation and debt discount amortization, not operational revenue/margin variance; we do not identify beat/miss vs. consensus for this quarter .

Key Takeaways for Investors

• Balance sheet de‑risked post‑Q2 via IPO and private placements (including JJDC), extending runway through 2015; near‑term liquidity risk at Q2 end was mitigated by July events .
• Reported losses are largely non‑cash and event‑driven (IPO vesting and debt accounting), suggesting underlying cash R&D/G&A were materially lower (R&D ex‑stock comp $1.6M; G&A ex‑stock comp & IPO bonus $1.1M in Q2) .
• 2H14 catalysts: MIN‑101 once‑daily PK/PD readout and Phase 2b submission; MIN‑202 multiple Phase 1/1b topline readouts—these are likely stock‑moving events given CNS focus and unmet need .
• Execution and governance watch‑items: remediation of internal control weaknesses and sustained progress on clinical milestones amid a small operating team .
• Tactical: With no revenue and limited Street estimates, trading likely keys off pipeline news flow and partnership developments; monitor regulatory submissions and top‑line data timing .
• Medium‑term: Funding beyond 2015 will be required for broader development (e.g., MIN‑117 and later-stage trials); the JJDC collaboration reduces financing risk for MIN‑202 in EU but broader capital strategy remains important .

Sources: Q2 2014 8‑K and Exhibit 99.1 press release ; Q2 2014 10‑Q, financial statements and MD&A ; Investor site press release links .