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Initiating Coverage April 19, 2017

Minerva Neurosciences (NERV) Initiation Report

LifeSci Investment Abstract

Minerva Neurosciences (NasdaqGM: NERV) is a biotechnology Company focused on Analysts developing treatments for disorders of the central nervous system (CNS). Minerva’s lead David Sherman, Ph.D. (AC) program is MIN-101, a novel therapy for negative symptoms in that has a (212) 915-2570 differentiated mechanism of action relative to existing typical and atypical . The [email protected] Company has reported positive results from a Phase IIb study and expects to have an End-of- Phase II meeting with the FDA this quarter in preparation for a Phase III trial launch in the second half of 2017. Minerva is also developing MIN-202 for primary and major Market Data depressive disorder (MDD) as well as MIN-117 for MDD. The Company expects to launch Price $7.25 three Phase II studies for these indications in the second half of this year. Market Cap (M) $256 Key Points of Discussion EV (M) $182 Shares Outstanding (M) 35.3 ■ Minerva is Addressing Unmet Needs in the CNS Space. Minerva, which was formed Fully Diluted Shares (M) 41.8 through the merger of Cyrenaic Pharmaceuticals (private) and Sonkei Pharmaceuticals Avg Daily Vol 153,985 (private) in 2013, is a CNS-focused Company with three late-stage assets. The Company 52-week Range: $3.45 - $15.84 has development programs for schizophrenia, insomnia, MDD, and Parkinson’s disease Cash (M) $83.0 (PD). Minerva’s management team has extensive clinical development experience, having Net Cash/Share $2.10 participated in conducting more than 800 clinical studies, which provides confidence in Annualized Cash Burn (M) $90.0 their ability to design trials and execute their planned development strategy. Years of Cash Left >0.9 Debt (M) $8.7 ■ Lead Candidate MIN-101 is Ready for Phase III. Minerva is developing MIN-101 as a Short Interest (M) 2.30 novel treatment for negative symptoms in schizophrenia. The Company reported positive Short Interest (% of Float) 9.9% results from a Phase IIb study, showing that MIN-101 was associated with a significant reduction in negative symptoms, and is planning to initiate a Phase III trial in the second Financials half of 2017. The Company expects to have an End-of-Phase II (EOP2) meeting with FY Dec 2014A 2015A 2016A the FDA early in the second quarter of 2017, in order to discuss the design of the Phase EPS Q1 (0.43)A (0.31)A (0.29)A III program. Details from this meeting will provide important information on Minerva’s Q2 (2.55)A (0.27)A (0.18)A regulatory path forward for MIN-101. Q3 (1.53)A (0.24)A (0.24)A Q4 0.04A (0.34)A (0.27)A FY (4.47)A (1.16)A (0.99)A Expected Upcoming Milestones

■ Early Q2 2017 – Planned End-of-Phase II meeting with the FDA. ■ H2 2017 – Initiation of Phase II study for MIN-202 in patients with insomnia. ■ H2 2017 – Initiation of Phase II study for MIN-202 in MDD patients. ■ H2 2017 – Launch of Phase III study for MIN-101 in patients with schizophrenia. ■ H2 2017 – Initiation of Phase IIa study for MIN-117 in MDD patients.

Page 1 For analyst certification and disclosures please see page 54 April 19, 2017

▪ Phase IIb Study Demonstrated Significant and Durable Effect on Negative Symptoms for Schizophrenia. Minerva has reported results from a Phase IIb study evaluating the safety and efficacy of a once-daily formulation of MIN-101 in patients with schizophrenia. The trial demonstrated that MIN-101 treatment, at either 32 mg or 64 mg, was associated with a statistically significant reduction in negative symptoms while positive symptom scores remained relatively stable. The ability of MIN-101 to alleviate negative symptoms without exacerbating positive symptoms may make this drug an attractive option for many individuals with schizophrenia. These effects were observed through the treatment period and 24-week open-label extension period, indicating that MIN-101 may induce a durable response. The data also point to a favorable safety and tolerability profile. Based on these results, Minerva plans to initiate a pivotal Phase III study in the second half of 2017.

▪ Large Market for Novel Antipsychotics. According to the National Institute of Mental Health, schizophrenia affects roughly 1% of people worldwide and 1.1% of the US population over 18 years old. The disease typically manifests earlier in men than in women with first episodes occurring at a mean age of 21 and 27 years, respectively. By age 30, 9 of 10 men but only 2 of 10 women with schizophrenia will manifest the disease. In the US, there are approximately 2.7 million people with schizophrenia. There are roughly 100,000 new cases diagnosed each year, although healthcare experts predict that an additional 10-20% go undiagnosed. In Europe, we estimate that there are roughly 4.6 million cases of schizophrenia.

Although the prevalence of schizophrenia is relatively low, the disease exacts a substantial burden on affected individuals and their families. In the US, the overall economic burden of treating schizophrenia is more than $60 billion annually in direct and indirect costs. Schizophrenia accounts for roughly 2.5% of total healthcare expenditure in the US,1,2 making it one of the most expensive adult diseases to treat.3,4 The overall antipsychotics market is estimated to be $5.2 billion and is expected to grow to $6.9 billion by 2021. Negative symptoms, which manifest as poor initiative and withdrawal behavior, are responsible for the poor social and vocational performance of individuals suffering from schizophrenia. As many as 80% of schizophrenia patients may be candidates for MIN-101 if the Phase III data support the use of the drug as an alternative to typical and atypical antipsychotics.

▪ MIN-202 Has the Potential to Be a Best-in-Class Drug. Minerva is co-developing MIN-202, an antagonist of the 2 receptor (OX2R), with Janssen Pharmaceuticals (NYSE: JNJ) for the treatment of insomnia and major depressive disorder (MDD). Since the orexin was discovered and shown to be important to the sleep- wake cycle, there has been intense interest in the development of drugs for insomnia targeting this signaling pathway. Merck’s Belsomra (), which blocks both the OX1 and OX2 receptors, became the first to receive FDA approval in 2014. However, the drug suffers from a slow onset of action, limiting its efficacy for sleep initiation, and a long half-life that increases the probability for next-day residual effects. Minerva expects that the selectivity for the OX2 receptor and the improved of MIN-202 may provide a drug profile that is better matched to a typical night’s sleep. The companies plan to launch the next trials for this compound in the second half of 2017.

1 Albers, LJ, et al., 2008. : a new atypical drug. Is it novel enough to impact the crowded market? Expert Opinion Investigational Drugs, 17, pp61-75. 2 Bernardo, M, et al., 2006. Cost-effectiveness analysis of schizophrenia relapse prevention: an economic evaluation of the ZEUS (-Extended-Use-In-Schizophrenia) study in Spain. Clinical Drug Investigation, 26, pp447-457. 3 Bartels, SJ, et al., 2003. Medicare and Medicaid costs for schizophrenia patients by age cohort compared with costs for depression, , and medically ill patients. American Journal of Geriatric Psychiatry, 11, pp648-657. 4 Sun, SX, et al., 2007. Review and analysis of hospitalization costs associated with antipsychotic nonadherence in the treatment of schizophrenia in the United States. Current Medical Research and Opinion, 23, pp2305-2312.

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Insomnia is thought to affect roughly 10% of adults including the vast majority of people suffering from major depressive disorder (MDD). Insomnia leads to a substantial economic burden, largely resulting from work absences and lost productivity. In the US, treating insomnia results in annual direct and indirect costs of $63 billion and 253 million days of lost work productivity due specifically to insomnia.5 The US market is currently dominated by , the active ingredient in Ambien, which accounts for roughly 75% of prescriptions. Belsomra, which is the only approved product targeting orexinergic signaling, is the sole product with no generic competition and currently represents about 7% of prescriptions.

▪ MIN-117 is a Novel MDD Treatment with an Improved Tolerability Profile. MIN-117 is a novel drug candidate with a unique receptor binding profile that is currently in development for the treatment of major depressive disorder (MDD), a severe form of depression that is estimated to affect roughly 30% of individuals at least once in their lifetime. With existing antidepressant therapies, roughly 60-70% of MDD patients do not achieve remission and 30-40% of patients do not experience a meaningful response.6 More than half of patients taking experience sexual dysfunction, and antidepressants are also associated with high rates of weight gain and reduced sleep quality.7 This results in a majority of patients changing or discontinuing therapy within the first year.8 New drugs for MDD that can improve upon the efficacy and/or tolerability profile of existing antidepressants could capture meaningful market share, especially in light of the side effects common to many of the marketed antidepressants. Minerva announced positive results from a Phase IIa study in May 2016 and expects to launch a US- based Phase IIa trial in late 2017.

Financial Discussion

Full Year 2016 Financial Results. On March 13, 2017, Minerva announced financial results for 2016. General and administrative expenses were $9.8 million for the year, compared to $7.6 million in 2015. Research and development expenses were $20.4 million, which was an increase from $18.5 million in the previous year. The Company reported a net loss for 2016 of $31.0 million, or $0.99 per share, compared to a net loss of $27.1 million in 2015. As of December 31, 2016, the Company had cash and cash equivalents of $83.0 million. The Company has given guidance that the cash on hand is sufficient to fund operations for at least the next 11 months.

5 Sivertsen, B, et al., 2011. The Economic Burden of Insomnia at the Workplace. An Opportunity and Time for Intervention? Sleep, 34(9), pp1151-1152. 6 Moncrieff, J and Kirsch, I, 2005. Efficacy of antidepressants in adults. British Medical Journal, 331, pp551–557 7 Ferguson, JM, 2001. SSRI Antidepressant : Adverse Effects and Tolerability. Primary Care Companion to the Journal of Clinical Psychiatry, 3, pp22-27. 8 Solem, CT, 2016. Analysis of treatment patterns and persistence on branded and generic medications in major depressive disorder using retrospective claims data. Neuropsychiatric Disease and Treatment, 12, pp2755-2764.

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Table of Contents

Company Description ...... 5 MIN-101: A 5-HT2A and Sigma 2 Antagonist to Treat Negative Symptoms in Schizophrenia...... 6 Mechanism of Action ...... 7 Preclinical Data ...... 7 Safety Profile ...... 8 Schizophrenia ...... 8 Causes and Pathogenesis ...... 8 Symptoms & Diagnosis ...... 9 Treatment ...... 10 Schizophrenia Market Information ...... 12 Epidemiology ...... 12 Market Size ...... 12 MIN-101 Clinical Data Discussion ...... 14 Other Drugs in Development ...... 20 Competitive Landscape for Schizophrenia Market ...... 21 MIN-202/JNJ-42847922: An Orexin 2 to Treat Insomnia and MDD ...... 21 Preclinical Data ...... 22 Safety Profile ...... 23 Insomnia ...... 23 Symptoms and Diagnosis ...... 24 Causes and Pathogenesis ...... 24 Treatment ...... 26 Insomnia Market Information ...... 28 Epidemiology ...... 28 Potential in Treating Major Depressive Disorder...... 29 Market Size ...... 29 Clinical Data Discussion for MIN-202 ...... 30 Other Insomnia Drugs in Development ...... 36 MIN-117: A Novel Antidepressant to Address Unmet Needs in Treating Depression ...... 38 Mechanism of Action ...... 39 Preclinical Data ...... 40 Safety Profile ...... 42 Major Depressive Disorder (MDD) ...... 42 Causes and Pathogenesis ...... 42 Treatment ...... 43 MDD Market Information ...... 44 Clinical Data Discussion for MIN-117 ...... 48 Competitive Landscape for MDD ...... 50 MIN-301: Recombinant Neuregulin-1β1 to Slow Progression of Parkinson’s Disease ...... 50 Intellectual Property & Licensing ...... 51 Management Team ...... 52 Risk to an Investment ...... 53 Analyst Certification ...... 54 Disclosures ...... 54

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Company Description

Minerva is a biotechnology Company focused on developing novel treatments for central nervous system (CNS) disorders, including schizophrenia, insomnia, major depressive disorder (MDD), and Parkinson’s disease (PD). The Company was formed through the merger of Cyrenaic Pharmaceuticals (private) and Sonkei Pharmaceuticals (private) in 2013. The Company’s full development pipeline is shown in Figure 1. Minerva’s lead program is MIN-101, a novel treatment for negative symptoms in schizophrenia that has a differentiated mechanism of action relative to existing typical and atypical antipsychotics. Current drugs for the treatment for schizophrenia directly interfere with D2 receptors. While D2 blockade is effective in reducing agitation and psychosis, it has no direct effect on negative symptoms or cognitive function. In addition, there are a range of side effects associated with currently marketed antipsychotics, including metabolic, endocrine, and movement-related adverse events such as weight gain, diabetes, mental slowness, and apathy, among others. Negative symptoms, which manifest as poor initiative and withdrawal behavior, are responsible for the poor social and vocational performance of individuals suffering from schizophrenia. In 2016, the Company reported positive results from a Phase IIb study, which demonstrated that MIN-101 monotherapy could yield statistically significant improvements in negative symptoms with minimal changes in positive symptom scores. The Company expects to have an End-of-Phase II (EOP2) meeting with the FDA early in the second quarter and plans to launch a Phase III trial in the second half of 2017.

Figure 1. Minerva’s Development Pipeline

Source: LifeSci Capital

Minerva is also developing MIN-202, or JNJ-42847922, in collaboration with Janssen Pharmaceuticals (NYSE: JNJ). MIN-202 is a selective orexin-2 receptor (OX2R) antagonist in development for individuals suffering from primary insomnia and major depressive disorder (MDD). Orexin, also known as hypocretin, is a neuropeptide that is exclusively released from a subpopulation of glutamatergic neurons in the lateral hypothalamus (LH) and has been shown to be critical to normal regulation of the sleep-wake cycle.9 Since orexin was discovered and linked to the sleep- wake cycle, there has been intense interest in the development of drugs targeting this signaling pathway. Merck’s Belsomra (suvorexant), which blocks both the OX1 and OX2 receptors, became the first orexin antagonist to receive

9 Sakurai, T, et al., 1998. and orexin receptors: a family of hypothalamic and G protein-coupled receptors that regulate feeding behavior. Cell, 92, pp575–583.

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FDA approval in 2014. However, the drug suffers from a slow onset of action, limiting its efficacy for sleep initiation, and a long half-life that often results in next-day drowsiness and its associated risks. Johnson & Johnson and Minerva are developing MIN-202 as a more selective orexin antagonist that has pharmacokinetics and better matched to a typical night’s sleep and plan to launch the next trials for this compound in the second half of 2017. Minerva has retained rights to the product in the EU.

MIN-117 is a novel antidepressant drug candidate with a unique receptor binding profile that is currently in development for the treatment of major depressive disorder (MDD), a severe form of depression that is estimated to affect roughly 30% of individuals at least once in their lifetime. Common drug treatments such as selective reuptake inhibitors (SSRIs) and serotonin- reuptake inhibitors (SNRIs) remain inadequate for most patients with only approximately one third achieving remission with initial treatment.10 In addition, more than half of patients taking antidepressants experience sexual dysfunction, and antidepressants are also associated with high rates of weight gain and reduced sleep quality.11 This results in a majority of patients changing or discontinuing therapy within the first year.12 Minerva expects that due to its differentiated mechanism of action, MIN-117 could be an effective therapy for a wider range of patients and with a cleaner safety profile than currently addressed with approved antidepressants.13

MIN-101: A 5-HT2A and Sigma 2 Antagonist to Treat Negative Symptoms in Schizophrenia

MIN-101 is a novel cyclic amide that potently blocks serotonin 5-HT2A receptors, sigma 2 receptors (2R), and α1- adrenergic receptors (α1R). The molecular structure of MIN-101 is shown in Figure 2. The drug is differentiated from the class of typical and atypical antipsychotics, which are the most commonly used drugs to treat schizophrenia, in that it does not directly block dopamine D2 receptors. The activity of typical and atypical antipsychotics at this receptor is thought to contribute to an improvement in positive symptoms, but blocking D2 signaling does not have a specific effect on negative symptoms or cognitive impairment and is associated with a range of undesirable side effects.

Figure 2. Molecular Structure of MIN-101

Source: LifeSci Capital

10 Trivedi, MH and Daly, EJ, 2008. Treatment strategies to improve and sustain remission in major depressive disorder. Dialogues in Clinical Neuroscience, 10, pp377-384. 11 Ferguson, JM, 2001. SSRI Antidepressant Medications: Adverse Effects and Tolerability. Primary Care Companion to the Journal of Clinical Psychiatry, 3, pp22-27. 12 Solem, CT, 2016. Analysis of treatment patterns and persistence on branded and generic medications in major depressive disorder using retrospective claims data. Neuropsychiatric Disease and Treatment, 12, pp2755-2764. 13 Davidson, M, et al., 2016. MIN-117: A Randomized, Double-Blind, Parallel-Group, Placebo- and Active-Controlled Study to Evaluate Efficacy and Safety in Patients with Major Depressive Disorder. American College of Neuropsychopharmacology Annual Meeting, Poster T132.

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Minerva is developing MIN-101 to address negative symptoms and cognitive impairment, which represent the largest burdens of the illness, and expects that MIN-101 could be used as a maintenance therapy instead of D2-blocking agents for patients not experiencing an acute exacerbation. The results of the Company’s Phase IIb program indicate that MIN-101 monotherapy can reduce negative symptoms in individuals with schizophrenia while maintaining stable positive symptom scores. This was the first time that a drug was shown to have a specific effect on negative symptoms. If this result is replicated in a Phase III program, then Minerva could have a strong case for transitioning some patients onto MIN-101 for maintenance therapy.

The Company expects to have an end-of-Phase 2 (EOP2) meeting with the FDA early in the second quarter of 2017 and then launch a pivotal Phase III study in the second half of 2017. Negative symptoms are thought to be present in a wide range of neurocognitive disorders, and Minerva may opt to pursue development of MIN-101 in other psychiatric indications in the future.

Mechanism of Action. Schizophrenia is a complex disease and its pathophysiology is not fully understood. MIN-

101 is thought to primarily exert its effects by blocking the 5-HT2A receptors, sigma 2 receptors (2R), and α1- adrenergic receptors (α1R). MIN-101 has no activity at receptors for dopamine, acetylcholine, and . While 5-

HT2A antagonism is associated with many antipsychotics, MIN-101 is unique in that it does not directly affect dopamine receptors. However, it is thought to influence signaling through blockade of the sigma 2 receptors.14

Preclinical Data

The safety and pharmacokinetics of MIN-101 have been evaluated across multiple preclinical studies. Both 6 and 9 month toxicology studies have shown an acceptable safety profile in rodents and monkeys. In addition, the drug’s efficacy has been studied in a rodent model of schizophrenia. The results of this preclinical study suggested that MIN- 101 can impact the negative symptoms and schizophrenia, which may be a differentiating factor relative to other commonly prescribed atypical antipsychotics.

Rodent Model of Schizophrenia. Investigators conducted a preclinical study in a rodent model of schizophrenia to evaluate the potential of MIN-101 to treat the disease. Schizophrenia-like symptoms were induced in animals by intraperitoneal (IP) administration of 2 mg/kg of (PCP). Animal models induced with PCP mimic many of the positive symptoms, negative symptoms, and behavioral deficits associated with schizophrenia.15 Following PCP administration, rats were randomized to treatment with MIN-101, , or , two of the most commonly prescribed atypical antipsychotics. Figure 3 highlights the results of this study. PCP-treated rats (light gray) exhibited a significant reduction in the amount of time spent in social interaction during a 10 minute period compared to non-treated animals (dark gray).

While the 0.3 mg/kg and 1 mg/kg doses of MIN-101 each led to a statistically significant increase in social interaction (left panel), neither risperidone nor olanzapine showed an effect (middle & right panels). The effect of MIN-101 was observed to be dose-dependent. These results suggest that MIN-101 has the potential to impact the negative symptoms of schizophrenia.

14 Lever, JL, et al., 2014. A selective sigma-2 receptor ligand antagonizes cocaine-induced hyperlocomotion in mice. Synapse, 68(2), pp73-84. 15 Jones, CA, et al., 2011. Animal models of schizophrenia. British Journal of Pharmacology, 164(6), pp1162-1194.

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Figure 3. Social Interaction in Animal Model of Schizophrenia Following Treatment with MIN-101

Source: Minerva S-1

Safety Profile. MIN-101 has been considered to be safe and well-tolerated. In clinical studies, the types and frequency of adverse events did not differ between individuals receiving MIN-101 and those receiving placebo. There have been no observed signs of metabolic AEs, weight gain, extrapyramidal effects, or sleep disturbances. Overall, 28% (29/102) of patients in the high-dose cohort and 23% (24/103) of the low-dose cohort experienced a treatment-emergent adverse event (TEAE), compared with a 24% (20/83) TEAE rate in the placebo group. There were 2 discontinuations due to a QT interval prolongation, based on prespecified criteria, out of 162 patients receiving the 64 mg dose of MIN-101.

Schizophrenia

Schizophrenia is a debilitating mental illness that typically does not present until adolescence or early adulthood. It is associated with a heterogeneous spectrum of psychiatric symptoms including hallucinations, disorganized thinking, delusions, paranoia, and other cognitive problems.16 The pathogenesis of schizophrenia is not well understood, although many genetic, environmental, and developmental risk factors for the disorder have been identified. There is no cure for schizophrenia and affected individuals need lifelong therapy to manage symptoms and prevent psychotic episodes.

Causes and Pathogenesis. The exact cause and pathogenesis of schizophrenia is not well-understood. The disease is thought to involve an interplay of genetic, environmental, and developmental factors that lead to alterations in brain structure and inappropriate neural signaling. Schizophrenia is known to run in families, and a family history of the disease is the single most important risk factor.17 However, there is no single gene that is responsible for the

16 Lakhan, SE and Vieira, K, 2009. Schizophrenia pathophysiology: are we any closer to a complete model? Annals of General Psychiatry, 8, pp12. 17 Mortensen, PB, et al., 1999. Effects of family history and place and season of birth on the risk of schizophrenia. New England Journal of Medicine, 340, pp603-608.

Page 8 April 19, 2017 development of schizophrenia. Many genetic alleles that confer an increased risk of developing schizophrenia have been identified,18 although the role of these genes in disease manifestation is not understood at present. Studies have found that an identical twin of an individual with schizophrenia has a greater than 40% chance of developing the disease. An immediate family member with the disease confers a 10% risk of developing schizophrenia. There are a range of environmental factors that can contribute to the disease manifestation in individuals who have a heightened risk of schizophrenia. Some of these environmental factors include:

▪ Complications during pregnancy, such as prenatal viral infection. ▪ Serious early childhood infections. ▪ Traumatic or highly stressful life situations. ▪ Regular drug use. ▪ Brain abnormalities.

There are wide ranges of changes that have been identified postmortem in the brains of individuals with schizophrenia. In certain brain areas, investigators have found reductions in brain volume, increased pyramidal neuron density, atypical dendritic trees, reduced numbers of axons and synapses, myelin alterations, changes in ventricle size, and other anatomical and physiological differences from the brains of healthy individuals. There have not been any reports of gliosis in the brains of schizophrenic patients, which indicates that the disease is not the result of a degenerative or inflammatory process.19,20 The broad changes found in the brain support a neurodevelopmental etiology for schizophrenia, but a lot about the disease is still unknown.

Symptoms & Diagnosis. Individuals with schizophrenia present with a heterogeneous mix of symptoms that are classified as either positive or negative. Positive symptoms are those that generally do not affect healthy individuals, such as auditory hallucinations or delusions. Negative symptoms are deficits in normal emotional traits that are usually present, such as social withdrawal, flattened affect, and poor motivation.21 Figure 4 highlights some of the most common positive and negative symptoms associated with schizophrenia. Individuals with schizophrenia also have cognitive difficulties that manifest as trouble processing information, completing tasks, understanding the environment, and remembering simple things.

18 Pearlson, GD and Folley, BS, 2008. Schizophrenia, psychiatric genetics, and Darwinian psychiatry: an evolutionary framework. Schizophrenia Bulletin, 34, pp722-733. 19 Selemon, LD, et al., 1995. Abnormally high neuronal density in the schizophrenic cortex. A morphometric analysis of prefrontal area 9 and occipital area 17. Archives of General Psychiatry, 52(10), pp805-818. 20 Selemon, LD, et al., 2003. Regional specificity in the neuropathologic substrates of schizophrenia: a morphometric analysis of Broca's area 44 and area 9. Archives of General Psychiatry, 60(1), pp69-77. 21 Mäki, P, et al., 2005. Predictors of schizophrenia—a review. British Medical Bulletin, 73-74(1), pp1-15.

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Figure 4. Common Positive and Negative Symptoms Associated with Schizophrenia

Positive Negative

Hallucinations Lack of emotion Delusions Inability to experience pleasure Paranoia Lack of interest in relationships Disorganized speech Lack of motivation Catatonic behavior

Source: LifeSci Capital

There are no definitive tests for schizophrenia so a diagnosis has to be made through interviews with the patient as well as friends and family. A diagnosis of schizophrenia is typically reached when the positive and negative symptoms have been present for 6 months or longer, there is a significant impairment to the patient’s quality of life, and the symptoms are not readily explained by other conditions or drug use. For this diagnosis, the symptoms must include at least two of the following: delusions, hallucinations, disorganized speech, catatonic behavior, or negative symptoms. Identifying the disease as early as possible greatly improves the patient’s chances of successfully managing the illness and reduces the likelihood of hospital admissions. With some individuals, it can take as long as a decade to reach a positive diagnosis of schizophrenia.

Treatment. The first-line therapy for most schizophrenia patients is a drug class known as atypical or second- generation antipsychotics. The first drug within this class approved by the FDA was Clozaril () in 1989, followed by Johnson & Johnson’s Risperdal (risperidone) in 1993 and Eli Lilly’s (NYSE: LLY) Zyprexa (olanzapine) in 1996. These drugs replaced an older generation of antipsychotics that caused severe motor side effects due to interactions with the extrapyramidal motor system in the brain. Figure 5 highlights the approved short-acting drugs for schizophrenia. There are 7 approved long-acting injectable (LAI) formulations, but these drugs are not shown in the figure.

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Figure 5. Approved Drugs to Treat Schizophrenia

Drug Company Delivery US Approval Haldol () generic Oral 1967 Clozaril (clozapine) generic Oral 1989 Risperdal (risperidone) generic Oral 1993 Zyprexa (olanzapine) generic Oral & IM 1996 Seroquel ( fumarate) generic Oral 1997 Geodon (ziprasidone) generic Oral & IM 2001 Abilify () generic Oral & IM 2002 FazaClo (clozapine) generic Oral 2004 Invega () generic IM 2006 Fanapt (iloperidone) Vanda Pharmaceuticals Oral 2009 Saphris () Allergan Sublingual/oral 2009 Latuda () Sumitomo Dainippon Oral 2010 Adasuve (inhaled ) Grupo Ferrer Inhaled 2012 Rexulti () Otsuka/Lundbeck Oral 2015 Vraylar () Allergan Oral 2015 IM: intramuscular injection

Source: LifeSci Capital

Among the currently approved drugs, every effective antipsychotic antagonizes the dopamine D2 receptor (D2R) to some degree. While D2 blockade was originally thought to be a critical to achieve clinical benefit in schizophrenia, several lines of evidence have called this hypothesis into question.22,23 The current treatment landscape fails to address negative symptoms, which are thought to be unrelated to D2 receptor activity.24 People are often diagnosed and put on atypical antipsychotics in the context of an ongoing psychotic episode, which is a sensible strategy to rapidly reduce positive symptoms; however, these drugs are not ideal for patients not currently experiencing an acute exacerbation. There is a pressing need for novel antipsychotics that provide greater efficacy in treating negative symptoms, since these disease features have the greatest impact on social and occupational outcomes.25

Existing therapies are also associated with a range of adverse events, including sleep disturbances, weight gain, metabolic syndrome, sedation, nausea, movement disorders, and impaired cognition. With the available treatment

22 Wolkin, A, et al., 1989. Dopamine blockade and clinical response: evidence for two biological subgroups of schizophrenia. American Journal of Psychiatry, 146(1), pp905-908. 23 Pilowsky, LS, et al., 1992. Clozapine, single photon emission tomography, and the D2 blockade hypothesis of schizophrenia. Lancet, 340(8813), pp199-202. 24 Köster, LS, et al., 2014. Emerging drugs for schizophrenia: an update. Expert Opinions on Emerging Drugs, 19(4), pp511-531. 25 Keefe, RS and Harvey, PD, 2012. Cognitive impairment in schizophrenia. Handbook on Experimental Pharmacology, 213, pp11- 37.

Page 11 April 19, 2017 options, 60-80% of individuals with schizophrenia discontinue treatment within 18 months due to lack of efficacy or side effects. While off therapy, these individuals are at an increased rate of relapse. Thus, novel drugs that can improve on the safety and tolerability profile of atypical antipsychotics could be a valuable addition to the treatment landscape, since it may potentially improve patient compliance.

Schizophrenia Market Information

Epidemiology. According to the National Institute of Mental Health, schizophrenia affects roughly 1% of people worldwide and 1.1% of the US population over 18 years old. The disease typically manifests earlier in men than in women with first episodes occurring at a mean age of 21 and 27 years, respectively. By age 30, 9 of 10 men but only 2 of 10 women with schizophrenia will manifest the disease. Figure 6 highlights the addressable schizophrenia patient population. In the US, there are approximately 2.7 million people with schizophrenia. There are roughly 100,000 new cases diagnosed each year, although healthcare experts predict that an additional 10-20% go undiagnosed. In Europe, we estimate that there are roughly 4.6 million cases of schizophrenia.

Figure 6. Target Patient Population

US Europe Total Population 320 M 740 M US Population over 18 yo (77.1%) 245 M 571 M Schizophrenia Prevalence (1.1%; 0.8%) 2.7 M 4.6 M

Source: LifeSci Capital

The 20% of patients experiencing persistent negative symptoms are likely the low-hanging fruit for Minerva if MIN- 101 were to be approved, since there are no drugs on the market that can reduce negative symptoms. However, there is the potential for MIN-101 to be used in the broader schizophrenia population, in part due to the drug’s ability to stabilize positive symptoms. Minerva envisions use of MIN-101 in all patients not actively experiencing an acute exacerbation of the disease. As many as 80% of schizophrenia patients may be candidates for MIN-101 if the Phase III data support the use of the drug as an alternative to typical and atypical antipsychotics, which antagonize dopamine receptors. Thus, MIN-101 may benefit a broad subset of the schizophrenia patient population. More data from a pivotal Phase III program could shed additional light on which patients may be suitable candidates for maintenance on MIN-101 as opposed to antipsychotics with D2-blocking properties.

Market Size. Although the prevalence of schizophrenia is relatively low, the disease exacts a substantial burden on affected individuals and their families. In the US, the overall economic burden of treating schizophrenia is more than $60 billion annually in direct and indirect costs. Schizophrenia accounts for roughly 2.5% of total healthcare

Page 12 April 19, 2017 expenditure in the US,26,27 making it one of the most expensive adult diseases to treat.28,29 Patients with schizophrenia usually require some form of daily living support for the rest of their lives. In addition, patient relapse is a large cost driver in the treatment of schizophrenia due to the very high cost of inpatient services. In 2005, rehospitalization costs related to antipsychotic non-adherence amounted to nearly $1.8 billion.30

The overall antipsychotics market is estimated to be $5.2 billion and is expected to grow to $6.9 billion by 2021. Figure 7 highlights the market share of prescriptions for approved antipsychotics in the US. This market is dominated by several blockbuster drugs, including Seroquel (quetiapine), Abilify (aripiprazole), Risperdal (risperidone), and Zyprexa (olanzapine), which together make up 75% of the market. These drugs have come off patent and face generic competition. In an attempt to avoid this competition, the companies have launched extended-release formulations of each of these drugs that provide greater convenience and compliance.

Figure 7. Market Share of Approved Antipsychotics

QUETIAPINE ER CLOZAPINE BREXPIPRAZOLE HALOPERIDOL PALIPERIDONE 4.0% ZIPRASIDONE QUETIAPINE 4.1% 31.6% LURASIDONE 4.3%

OLANZAPINE 10.1%

ARIPIPRAZOLE RISPERIDONE 17.3% 16.4%

QUETIAPINE ARIPIPRAZOLE RISPERIDONE OLANZAPINE LURASIDONE ZIPRASIDONE HALOPERIDOL PALIPERIDONE CLOZAPINE QUETIAPINE ER CHLORPROMAZINE BREXPIPRAZOLE ASENAPINE CARIPRAZINE HCL RISPERIDONE ER ARIPIPRAZOLE ER THIOTHIXENE LOXAPINE ILOPERIDONE

Source: Symphony Health

26 Albers, LJ, et al., 2008. Iloperidone: a new benzisoxazole atypical antipsychotic drug. Is it novel enough to impact the crowded atypical antipsychotic market? Expert Opinion Investigational Drugs, 17, pp61-75. 27 Bernardo, M, et al., 2006. Cost-effectiveness analysis of schizophrenia relapse prevention: an economic evaluation of the ZEUS (Ziprasidone-Extended-Use-In-Schizophrenia) study in Spain. Clinical Drug Investigation, 26, pp447-457. 28 Bartels, SJ, et al., 2003. Medicare and Medicaid costs for schizophrenia patients by age cohort compared with costs for depression, dementia, and medically ill patients. American Journal of Geriatric Psychiatry, 11, pp648-657. 29 Sun, SX, et al., 2007. Review and analysis of hospitalization costs associated with antipsychotic nonadherence in the treatment of schizophrenia in the United States. Current Medical Research and Opinion, 23, pp2305-2312. 30 Sun, SX, et al., 2007. Review and analysis of hospitalization costs associated with antipsychotic nonadherence in the treatment of schizophrenia in the United States. Current Medical Research and Opinion, 23, pp2305-2312.

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MIN-101 Clinical Data Discussion

Minerva has conducted six Phase I studies, one Phase IIa proof-of-concept study, and most recently a Phase IIb study for MIN-101. These trials have relied on the Positive and Negative Syndrome Scale (PANSS), which is a standard measure of disease severity for schizophrenia. The Phase IIb study demonstrated that MIN-101 treatment led to a statistically significant reduction in negative symptoms with stable positive symptom scores for the duration of the study. Based on the positive Phase IIb results, Minerva plans to launch a pivotal Phase III trial for MIN-101 in the second half of 2017. The Company expects to have an end-of-Phase 2 (EOP2) meeting with the FDA early in the second quarter of 2017, in order to discuss the design of the pivotal Phase III program.

Phase I Trials

Mitsubishi Tanabe Pharma conducted 6 Phase I studies prior to Minerva licensing the drug. These trials were conducted between 2002 and 2004. These studies evaluated the safety, tolerability, pharmacokinetics, and pharmacodynamics of MIN-101, and have largely shown a favorable safety and tolerability profile. The main adverse events (AE) identified in these studies were dizziness, vital sign changes, central nervous system (CNS) events, cardiac events including QT interval prolongation, and gastrointestinal (GI) events. In one of the Phase I studies, elongation of the QT interval, particularly among some patients receiving 48 mg of MIN-101 twice daily, was a contributing factor in Mitsubishi Tanabe’s decision to discontinue the program. The drug was subsequently licensed to Minerva with Mitsubishi Tanabe retaining development and commercialization rights in certain Asian territories.

Phase IIa Trial

Minerva completed a Phase IIa study in 2009 that evaluated the safety and efficacy of MIN-101 in patients with schizophrenia. In the trial, MIN-101 was shown to significantly reduce negative symptom subscores relative to placebo. The trial also suggested improvements in cognitive functioning and sleep, although it was not powered to detect these differences with statistical significance.

Trial Design. This randomized, double-blind, placebo controlled Phase IIa study evaluated MIN-101 as a treatment in schizophrenia patients experiencing an acute episode requiring hospitalization.31 These patients had positive, negative, and cognitive symptoms of the disease and were no longer adequately controlled with prescribed medications. To be included in the trial, patients had a PANSS score of at least 60. Prior to treatment in the trial, all patients discontinued prior therapy for an average of 8 days. Enrolled subjects were randomized to receive either 32mg of MIN-101 or placebo twice daily. The primary endpoint was the change in PANSS total score and sub-scores relative to baseline after one month of therapy with MIN-101 or placebo. Secondary endpoints included changes in PANS scores at 3 months, as well as psychological scales to measure cognition, mood, anxiety, and sleep. These scales include the Clinical Global Impression – Severity (CGI-S), Drug Attitude Inventory-10 (DAI-10), Pittsburgh Sleep Quality Assessment (PSQI), Brief Assessment of Cognition in Schizophrenia, Montgomery-Asberg Depression Scale (MADRS), and Hamilton Anxiety (HAM-A) scales.

Trial Results. Minerva reported positive results from this study in 2009. Figure 8 highlights the effect of MIN-101 on total PANSS scores. Patients treated with MIN-101 experienced a 24.1 decrease in total PANSS score at 3 months, compared with a 17.9 drop for the placebo group. The difference was largely derived from effects on the negative and

31 https://clinicaltrials.gov/ct2/show/NCT00861796

Page 14 April 19, 2017 activation subscores. MIN-101 treated patients experienced a statistically significant decrease in their negative symptom scores relative to placebo-treated individuals (p<0.05). A similar trend was seen on the activation subscore, although this effect did not reach statistical significance (p=0.08). No significant differences were observed on the other subscores.

Figure 8. PANSS Subscores Following 3 Months of Treatment

Source: Minerva S-1

Investigators also used the interview-based Brief Assessment of Cognition in Schizophrenia (BACS) scale to evaluate changes in patients’ cognitive performance. The BACS scale tests processing speed, reasoning, executive function, verbal memory, and working memory. The results of the trial, shown in Figure 9, suggest that MIN-101 treatment led to an improvement in verbal fluency, verbal memory, and motor speed compared with the effects of placebo therapy. However, the trial was not powered to reach statistical significance for this endpoint.

Figure 9. BACS Subscores Following 3 Months of Treatment

Source: Minerva S-1

Page 15 April 19, 2017

Several patients were evaluated with polysomnography (PSG) to identify potential effects of MIN-101 on sleep, an exploratory endpoint in the study. On electroencephalography (EEG), the data showed that MIN-101 had positive effects on sleep initiation. Sleep disturbances including insomnia are fairly common among schizophrenia patients, so confirmation of these sleep effects in additional trials could increase the clinical value of MIN-101.

Phase I Trial

Following the completion of the Phase IIa trial, Minerva conducted a small Phase I study to confirm the safety, tolerability, and pharmacokinetics of a novel once-daily formulation of MIN-101.32 In Part 1 of this study, the primary endpoint was the pharmacokinetics of MIN-101 and its main metabolite assessed pre-dose and at multiple time points from 0.5 to 72 hours following a single dose. In Part 2, the primary endpoint was the change in QT interval at day 8 compared with pre-dose levels following 7 days of drug administration.

Phase IIb Trial

Minerva conducted a Phase IIb study evaluating the safety and efficacy of a once-daily formulation of MIN-101 in patients with schizophrenia. The trial demonstrated that MIN-101 treatment was associated with a statistically significant reduction in negative symptoms while positive symptom scores remained stable. The data also point to a favorable safety and tolerability profile. Based on these results, Minerva plans to initiate a pivotal Phase III study in the second half of 2017.

Trial Design. This randomized, double-blind, placebo controlled Phase IIb study tested the safety and efficacy of MIN-101 in the treatment of patients experiencing the negative symptoms of schizophrenia. Patients enrolled in the study had to have a negative subscore on the PANSS scale of at least 20. A schematic of the trial design is shown in Figure 10. Enrolled subjects were randomized 1:1:1 to receive once-daily oral administration of 32 mg of MIN-101, 64 mg of MIN-101, or placebo during the core portion of the study. Following this treatment period, patients receiving placebo were re-randomized to one of the active drug cohorts for the duration of the 24-week open-label extension phase.

32 https://clinicaltrials.gov/ct2/show/NCT02232529

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Figure 10. Phase IIb Trial Design for MIN-101

Source: Minerva Presentation

The primary endpoint was the change in negative subscore at week 12 compared to baseline using the pentagonal structure model (PSM). Secondary endpoints included the change in PANSS total score and subscores using the 3 factors negative symptom analysis, Brief Negative Symptoms Scale, Brief Assessment of Cognition in Schizophrenia (BACS), Clinical Global Impressions of severity (CGI-S) and global improvement (CGI-I) scales. Other important secondary endpoints included safety and tolerability and persistence of efficacy during the open-label extension period. Safety measures used in the trial included physical examination, adverse event (AE) monitoring, electrocardiogram (ECG), vital signs, Sheehan suicidality scale, and the Abnormal Involuntary Movement Scale (AIMS).

Efficacy Results. The trial demonstrated a statistically significant reduction in negative symptoms and total PANSS score. Figure 11 highlights the efficacy results on the primary endpoint, which was the change in negative symptom PANSS subscore using the pentagonal model. After 12 weeks, the cohorts treated with 32 mg (green) or 64 mg (red) of MIN-101 had significantly lower negative symptom subscores compared with placebo-treated patients (blue). For the 64 mg dose cohort, patients experienced a greater than 3 point decrease in the negative symptom subscore compared with a roughly 1.5 point drop in the placebo group (p0.01). A difference between the treatment and placebo groups was already observed at 2 weeks, indicating a rapid onset of the effect. The trial also met multiple key secondary endpoints with statistical significance, and these improvements were specific to changes in negative symptoms as opposed to secondary effects.

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Figure 11. Change in Negative Symptoms Subscore from Baseline

Source: Corporate Presentation

Safety Results. In the trial, MIN-101 was considered to be safe and well-tolerated with no substantial differences in the incidence and types of adverse events observed in the treatment and placebo groups. Figure 12 highlights the most common adverse events in the trial that affected greater than 5% of the patients in the Phase IIb study. It is worth noting that this table include safety data from the extension phase as well as the double-blind portion of the trial. Overall, 28% (29/102) of patients in the high-dose cohort and 23% (24/103) of the low-dose cohort experienced a treatment-emergent adverse event (TEAE), compared with a 24% (20/83) TEAE rate in the placebo group. 6% (6/102) of patients treated with the high-dose of MIN-101 experienced a QT prolongation, which resulted in two patient discontinuations from the study. While there was a greater rate of psychiatric disorder AEs in the placebo group than either treatment group, there was a higher rate of headache in patients treated with MIN-101 compared with placebo, which is not unexpected for a CNS-active drug.

Figure 12. Adverse Events Occurring in More than 5% of Patients in the Phase IIb Study Placebo 32 mg MIN-101 64 mg MIN-101 Subjects with Any Common TEAE 20 (24.1%) 24 (23.3%) 29 (28.4%) QT Prolongation 0 (0.0%) 0 (0.0%) 6 (5.9%) CNS Disorders 3 (3.6%) 9 (8.7%) 8 (7.8%) Headache 3 (3.6%) 9 (8.7%) 8 (7.8%) Psychiatric Disorders 18 (21.7%) 17 (16.5%) 18 (17.6%) Anxiety 5 (6.0%) 8 (7.8%) 7 (6.9%) Insomnia 8 (9.6%) 7 (6.8%) 8 (7.8%) Schizophrenia 9 (10.8%) 4 (3.9%) 7 (6.9%) Note: This includes patients who crossed over to treatment with MIN-101 in the open-label extension phase

Source: Minerva Presentation

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Extension Phase. Following the 12-week core phase, placebo-treated patients were given the option to cross over to MIN-101 treatment in an open-label 24-week extension phase. The results of the extension phase point to a durable response to MIN-101 as well as a favorable long-term safety and tolerability profile. The decline in negative symptom scores continued through week 36, amounting to a 5.5 points and 4.9 points decrease at the end of the trial relative to baseline for the 32 mg and 64 mg dose cohorts, respectively. These results are shown in Figure 13.

Figure 13. Change in Negative Symptoms at End of Extension Phase

Source: Corporate Presentation

Positive symptoms remained stable throughout the 9 month study, as shown in Figure 14, indicating that MIN-101 had a direct, specific effect on negative symptoms. The ability of MIN-101 to alleviate negative symptoms without exacerbating positive symptoms may make this drug an attractive therapeutic option for many individuals with schizophrenia.

Figure 14. Change in Positive Symptoms at End of Extension Phase

Source: Corporate Presentation

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Phase I Trial

Minerva is currently testing a modified-release formulation of MIN-101 in a Phase I study and expects to report results from this study in the second quarter of 2017. This randomized, open-label Phase I study is evaluating the pharmacokinetics of modified-release (MR) formulations of MIN-101 in 16 healthy volunteers.33 The study contains two parts—a 3-period single-dose crossover study testing the drug in the fasted state, and then a food-effect study on a selected formulation. The primary endpoints for part 1 of this study consist of a range of pharmacokinetic parameters over 72 hours post-dosing. Part 2 of the study focuses on the time to maximum concentration (Tmax), time delay for absorption (Tlag), and other PK parameters. Secondary endpoints include changes in the QT interval as well as other safety measures.

Other Drugs in Development

Figure 15 highlights all of the late-stage clinical programs for schizophrenia. Most of the schizophrenia drugs in development are reformulations of existing atypical antipsychotics and are not expected to substantially shift the treatment paradigm. In particular, based on mechanisms of action and the data obtained to date, none of these drugs are expected to meaningfully impact negative symptoms. Of the 195 assets that have entered into clinical development for schizophrenia, 100 have been suspended or placed on hold, underscoring the difficulty of developing drugs for this indication. In addition, a meta-analysis of 168 randomized, placebo controlled clinical studies that evaluated efficacy in treating patients with predominantly negative symptoms has shown that none demonstrated a clinical benefit on negative symptoms.34 Given this history, Minerva’s demonstration of a statistically significant effect on negative symptoms, the first time this has been achieved in a clinical study, makes MIN-101 stand out in a crowded development space.

Figure 15. Antipsychotics in Late-Stage Clinical Development for Schizophrenia

Drug Company Stage Delivery Abilify/Proteus (aripiprazole) Otsuka NDA Oral Aristada 2-Month () NDA IM ALKS3831 (olanzapine & samidorphan) Alkermes III Oral RBP-7000 (risperidone depot) Indivior III SC EN-3342 (risperidone) Apple Tree Partners III SC HP-3070 (asenapine transdermal patch) Hisamitsu Pharmaceuticals III TD Lu AF35700 Lundbeck III Oral Intra-Cellular Therapeutics III IV & Oral pomaglumetad methionil Denovo Biopharma III Oral Nuplazid () Acadia Pharmaceuticals III Oral MIN-101 Minerva Neurosciences III-ready Oral

Source: LifeSci Capital

33 https://clinicaltrials.gov/ct2/show/NCT03038646 34 Fusar-Poli, P, 2015. Treatments of Negative Symptoms in Schizophrenia: Meta-Analysis of 168 Randomized Placebo- Controlled Trials. Schizophrenia Bulletin, 41(4), pp892-899.

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Competitive Landscape for Schizophrenia Market

D2 Blockade May Not Be Optimal Strategy for Most Schizophrenia Patients. Current drugs for the treatment for schizophrenia directly interfere with dopamine D2 receptors. While D2 blockade is effective in reducing agitation and psychosis, it has no direct effect on negative symptoms or cognitive function. In addition, there are a range of side effects associated with currently marketed antipsychotics, including metabolic, endocrine, and movement-related adverse events such as weight gain, diabetes, mental slowness, and apathy, among others.

Minerva expects that MIN-101 could be used as a maintenance therapy instead of D2-blocking agents for patients not experiencing an acute exacerbation. This would allow for these patients to avoid many of the undesirable side effects associated with existing typical and atypical antipsychotics. The results of the Company’s Phase IIb program indicate that MIN-101 monotherapy can reduce negative symptoms in individuals with schizophrenia while maintaining stable positive symptom scores. This was the first time that a drug was shown to have a specific effect on negative symptoms. If this result is replicated in a Phase III program, then Minerva could have a strong case for transitioning some patients onto MIN-101 for maintenance therapy. This would represent a meaningful shift in the treatment paradigm for schizophrenia.

Poor Adherence to Therapy is a Major Driver of Cost. Patient relapse is a consistent cost driver in the treatment of schizophrenia due to the very high cost of inpatient services. In 2010, roughly 22% of hospital visits for cases of schizophrenia resulted in readmission within 30 days.35 Partially adherent and fully non-compliant patients have mean hospital stay durations of 18 and 30 days, respectively.36 The high costs associated with a relapse create a strong economic incentive for treatments that better promote treatment compliance.

MIN-202/JNJ-42847922: An Orexin 2 Receptor Antagonist to Treat Insomnia and MDD

MIN-202, or JNJ-42847922, is a selective orexin-2 receptor (OX2R) antagonist that is in development as a pharmacotherapy for individuals suffering from insomnia.37 Orexin, also known as hypocretin, is a neuropeptide that is exclusively released from a subpopulation of glutamatergic neurons in the lateral hypothalamus (LH) and has been shown to be critical to normal regulation of the sleep-wake cycle.38 There are two receptors for orexin, the orexin 1 receptor (OX1R) and OX2R, which are broadly expressed in a variety of structures involved in the sleep-wake cycle. Animals with disruptions to orexin signaling, either through mutations to the or its receptor, show hallmark features of narcolepsy, a sleep disorder characterized by excessive daytime sleepiness and propensity for sleep attacks. The thinking is that blockade of orexin signaling with an antagonist can facilitate sleep in individuals with insomnia.

Two orexin antagonists with dual activity at both the OX1R and OX2 receptors have been evaluated in human clinical studies, and one of these drugs, Merck’s Belsomra (suvorexant), has been approved by the FDA for the treatment of

35 Elixhauser, A and Steiner, C, 2013. Readmissions to U.S. Hospitals by Diagnosis, 2010. Healthcare Cost and Utilization Project, Brief #153, April 2013. 36 Ascher-Svanum, H, et al., 2009. adherence levels and differential use of mental-health services in the treatment of schizophrenia. BMC Research Notes, 2, pp6. 37 Letavic, MA, et al., 2015. Novel Octahydropyrrolo[3,4‑c] Are Selective Orexin‑2 Antagonists: SAR Leading to a Clinical Candidate. Journal of Medicinal Chemistry, 58, pp5620-5636. 38 Sakurai, T, et al., 1998. Orexins and orexin receptors: a family of hypothalamic neuropeptides and G protein-coupled receptors that regulate feeding behavior. Cell, 92, pp575–583.

Page 21 April 19, 2017 insomnia. However, there are differences in where OX1R and OX2R are expressed, and Minerva expects that MIN- 202, which only affects OX2R, may have comparable efficacy to the dual orexin antagonists with an improved safety and tolerability profile. In particular, the Company expects that the drug’s half-life is well-suited to minimize the risk of next-day impairment, which is a problem with most sleep aids. Minerva is co-developing MIN-202 with Johnson & Johnson (NYSE: JNJ) and has retained rights to the product in the EU. The program covers development for two indications: primary insomnia and major depressive disorder (MDD). Given the high rate of insomnia in MDD patients, this indication may represent the most pressing unmet need and the greatest opportunity for Minerva in terms of pricing and potential market penetration.

Preclinical Data.

Given that dual antagonists of the OX1 and OX2 receptors can promote sleep, investigators set out to determine whether there were differential effects to the selective activation of these receptors.39 Figure 16 highlights the change in latency to non-REM (NREM) and REM sleep as well as the change in duration of NREM and REM sleep following treatment with the dual antagonist (gray), the OX2R antagonist JNJ-10397049 (black), or the OX1R antagonist SB-408124 (white). Administration of either the 3 or 30 mg/kg doses of JNJ-10397049 led to a significantly shorter latency to the onset of NREM sleep and prolonged duration of NREM sleep compared to vehicle treatment (p<0.01). The 30 mg/kg dose of almorexant, the dual orexin antagonist, also led to a significant reduction in latency to NREM sleep (p<0.05), although the effect size was smaller than what was observed with JNJ-10397049. In contrast, administration of an OX1R antagonist, SB-408124, did not alter the latency to sleep or the duration of sleep. These results indicate that a selective OX2R antagonist can reduce the latency to NREM sleep, highlighting the potential of drugs in this class to be used as a sleep aid for individuals who struggle with insomnia.

Figure 16. Latency to Sleep and Sleep Duration Following Treatment with Orexin Antagonists

Source: Dugovic et al., 2009

Typically during sleep, body temperature and locomotor activity decrease. Figure 17 displays the body temperature and counts of locomotor activity per minute for the 2 hours following treatment with almorexant (gray), JNJ-10397049 (black), or SB-408124 (white) during either the light phase or dark phase. Treatment with JNJ-10397049, the selective

39 Dugovic, C, et al., 2009. Blockade of Orexin-1 Receptors Attenuates Orexin-2 Receptor Antagonism-Induced Sleep Promotion in the Rat. Journal of Pharmacology and Experimental Therapeutics, 330(1), pp142-151.

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OX2R antagonist, showed a significant drop in body temperature and locomotor activity when the drug was administered during the light phase (equivalent to nighttime for the rat), paralleling the effects observed on the rat’s sleep. Neither almorexant nor SB-408124 led to a reduction in body temperature during the light phase, and only the 30 mg/kg dose of almorexant resulted in a modest decrease in locomotion (p<0.05).

Figure 17. Body Temperature and Locomotion Following Treatment with Orexin Antagonists

Source: Dugovic et al., 2009

Safety Profile. MIN-202 was considered safe and well-tolerated with no serious adverse events reported in the study. The most common treatment-emergent adverse events (TEAE) were and abnormal dreams. The selectivity of MIN-202 for the OX2 receptor is hypothesized to reduce the risk of some of the dose-dependent adverse events observed with Belsomra (suvorexant).

Insomnia

According to the International Classification of Sleep Disorders, insomnia is defined as difficulty initiating or maintaining sleep that persists for at least 1 month and causes significant distress or impairment.40 Insomnia is associated with increased rates of motor vehicle accidents, falls, increased healthcare utilization, and decreased survival rates.41,42 Insomnia can either result from an underlying medical condition, known as secondary insomnia, or occur independent of any comorbidities. To meet the definition for primary insomnia, the sleep disturbance cannot result from a sleep disorder, psychiatric condition, medication, or drug of abuse. Figure 18 highlights some of the conditions and circumstances that can cause insomnia. A wide range of medical conditions can lead to insomnia, including cardiovascular diseases like congestive heart failure (CHF) and coronary artery disease (CAD), pulmonary conditions like chronic obstructive pulmonary disease (COPD) and asthma, and neurological conditions like stroke and Parkinson’s disease.43 Insomnia is also a common comorbidity of many psychiatric conditions, including major

40 Pigeon, WR, 2010. Diagnosis, prevalence, pathways, consequences & treatment of insomnia. 41 Brenca, RM, 2001. Consequences of insomnia and its therapies. Journal of Clinical Psychiatry, 62(suppl. 10), pp33-38. 42 Bramoweth, AD and Taylor, DJ, 2012. Chronic insomnia and health care utilization in young adults. 43 Mai, E, and Buysse, DJ, 2008. Insomnia: Prevalence, Impact, Pathogenesis, Differential Diagnosis, and Evaluation. Sleep Medicine Clinic, 3(2), pp167-174.

Page 23 April 19, 2017 depressive disorder (MDD), and even stress and anxiety in otherwise healthy individuals can lead to problems falling asleep.

Figure 18. Conditions that Can Cause Insomnia

Medical Conditions Psychiatric Conditions Medications Substances Congestive heart failure Depression Antidepressants Caffeine Coronary artery disease Anxiety Corticosteroids Nicotine Stroke Panic disorders Beta- Chronic obstructive Post-traumatic stress Beta-antagonists Cocaine pulmonary disease (COPD) disorder (PTSD) Parkinson’s disease Statins Diabetes Decongestants Rheumatoid arthritis Chronic renal failure Gastroesophageal reflux

Source: Buysse et al., 2005

Symptoms and Diagnosis. A physician assessment for insomnia typically includes taking a thorough sleep, medical, and psychiatric history. The differential diagnosis for insomnia involves ruling out many of the possible comorbidities that can cause or contribute to insomnia. The patient interview will usually cover detailed information on the nature of the complaint, the sleep-wake routine, daytime sleepiness and associated symptoms, prior attempts at therapy, substance use, and family history of relevant conditions.44 Interviews with other sources, such as a spouse or family member, may identify other symptoms of which the individual suffering from insomnia is not aware. Polysomnography (PSG) is not typically used to diagnose insomnia, so the diagnosis stems from the patient interview and sleep diaries, which report sleep-wake times, sleep duration, and other key sleep parameters.

Causes and Pathogenesis. Insomnia is considered to be a state of hyperarousal, whereby the changes in brain activity underlying transitioning to sleep are prevented from occurring. In Figure 19, we highlight some key components of the neurocircuitry controlling the sleep-wake cycle. The most important thing to understand is that sleep is an active process, requiring the activation of a key structure, the ventrolateral preoptic area (VLPO). While awake, a variety of wake-promoting structures, such as the tuberomammillary nucleus (TMN), locus coeruleus (LC), dorsal raphe (DR), and several others, actively inhibit the VLPO.45 Conversely, while asleep, the VLPO broadly inhibits the key wake- promoting structures as well as many of their downstream targets. This circuit is referred to as a flip-flop switch (think see-saw), an engineering term referring to a circuit that has two stable points. In this regard, sleep and wake are opposing forces. High levels of activity in the wake-promoting structures can tip the switch towards wakefulness, while activation of the VLPO can tip the switch towards sleep. In healthy individuals, transitions between sleep and wake result from a fairly rapid tipping of this scale in response to circadian and homeostatic influences.

44 Mai, E, and Buysse, DJ, 2008. Insomnia: Prevalence, Impact, Pathogenesis, Differential Diagnosis, and Evaluation. Sleep Medicine Clinic, 3(2), pp167-174. 45 Saper, CB, et al., 2005. Hypothalamic regulation of sleep and circadian rhythms. Nature, 437, pp1257-1263.

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Figure 19. Neurocircuitry Controlling Sleep-Wake Cycle

Source: Saper et al., 2005 46

Orexin is a neuropeptide released from a key population of wake-promoting neurons in the lateral hypothalamus (LH).47,48 The orexin neurons have broad projections throughout the brain that include all of the wake-promoting structures like the LC, TMN, and DR.49 Thus, the glutamate and orexin released from the axon terminals of these neurons play an important role in shaping the activity level of many of the wake-promoting structures in the brain. The orexin neurons receive input from neurons involved in circadian rhythm, feeding, thermoregulation, emotional stress, and other homeostatic functions.50

Changes that tip the balance of the flip-flop switch can have profound effects on an individual’s sleep-wake cycle. For example, disruptions to orexin signaling can cause narcolepsy, a sleep disorder characterized by excessive daytime sleepiness and a propensity for sleep attacks.51 Alternatively, a surge in stress could boost activity in the wake- promoting structures, making it difficult for the switch to flip towards sleep or making the switch less stable and more prone to flip back towards wakefulness once already asleep.

46 Saper, CB, et al., 2005. Hypothalamic regulation of sleep and circadian rhythms. Nature, 437, pp1257-1263. 47 de Lecea, L, et al., 1998. The hypocretins: hypothalamus-specific with neuroexcitatory activity. Proceedings of the National Academy of Sciences USA, 95(1), pp322-327. 48 Sakurai, T, et al., 1998. Orexins and orexin receptors: a family of hypothalamic neuropeptides and G protein-coupled receptors that regulate feeding behavior. Cell, 92, pp573-585. 49 Sakurai, T, et al., 2007. The neural circuit of orexin (hypocretin): maintaining sleep and wakefulness. Nature Reviews Neuroscience, 8, pp171-181. 50 Yoshida, K, et al., 2006. Afferents to the orexin neurons of the rat brain. Journal of Comparative Neurology, 494, pp845-861; 51 Chemelli, RM, 1999. Narcolepsy in orexin knockout mice: molecular genetics of sleep regulation. Cell, 98(4), pp437-451.

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Treatment. The goal of therapy for insomnia is to improve the quantity and quality of sleep and reduce daytime sleepiness. The first course of action to treat insomnia is changes in behavior and lifestyle intended to improve one’s sleep hygiene. Some aspects of sleep hygiene include:

▪ Maintaining a regular sleep schedule. ▪ Avoid caffeinated beverages after lunch. ▪ Avoid alcohol near bedtime. ▪ Avoid nicotine products, particularly during the evening. ▪ Avoid prolonged use of computer screens before bedtime. ▪ Avoid daytime naps.

When cases become chronic or are not resolved with behavioral and lifestyle changes, there are several pharmacotherapy options, shown in Figure 20, that are used to treat insomnia. , a class of drugs that positively modulate GABAA receptors, became a popular insomnia treatment in the 1970s. However, these drugs pose risks of and dependence, and most have half-lives over 8 hours which increase the probability of next day residual effects. In 1993, the FDA approved the first non- GABAA receptor for insomnia, ’s (NYSE: SNY) Ambien (zolpidem). Subsequent approvals in this class for Pfizer’s (NYSE: PFE) Sonata () and Sunovion Pharmaceuticals’ (private) Lunesta () provided patients with additional non- benzodiazepine options. Zolpidem, which is now generic, is the most prescribed , accounting for roughly 75% of prescriptions in the US. Overall, the sleep improvements achieved with existing is quite modest.

Figure 20. Currently Approved Treatments for Insomnia Drug Company Mechanism Delivery Approval

Ambien/Ambien CR GABAA receptor Sanofi Oral 1993/2005 (zolpidem) agonist

Sonata GABAA receptor Pfizer Oral 1999 (zaleplon) agonist

Lunesta GABAA receptor Sunovion Pharmaceuticals Oral 2004 (eszopiclone) agonist Rozerem receptor Takeda Oral 2005 () agonist

Edluar GABAA receptor Mylan Pharmaceuticals SL 2009 (zolpidem) agonist Silenor Histamine H1 Pernix Therapeutics Oral 2010 () receptor antagonist

GABAA receptor Intermezzo (zolpidem) Purdue Pharma SL/TM 2011 agonist Belsomra Merck Oral 2014 (suvorexant) antagonist Circadin Neurim Pharmaceuticals Oral 2007 * (melatonin) agonist * Not approved in the US

Source: LifeSci Capital

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While the non-benzodiazepine drugs were originally thought to offer comparable efficacy to benzodiazepines but with a better safety profile, more recent research has called this into question. Non-benzodiazepines like zolpidem, zaleplon, and eszopiclone have been linked to many of the adverse events that were associated with benzodiazepines. Next-day drowsiness is a persistent problem in many individuals taking these drugs, especially in the elderly, and cases are The difficulty for many of the sleep aids has been a challenge of half-life. For some drugs, the half-life is too short for a typical night’s sleep, which may lead to difficulty staying asleep once the drug wears off. For other drugs, studies have shown that enough remains the next morning to impair driving and memory. These drugs are also linked to cases of parasomnias such as sleep walking and eating binges while asleep.

In addition to the side effect profiles being problematic, there are fundamental problems with targeting GABA receptors as a treatment for insomnia. GABA receptors are expressed on the vast majority of neurons in the brain, including those that promote sleep. Sleep is, after all, an active process, requiring the activation of the ventrolateral preoptic area (VLPO) and a concomitant silencing of wake-promoting structures. The VLPO projects to all wake- promoting structures and releases GABA to actively suppress activity in these areas of the brain. Over long-term use of a GABA-targeting sleep aid, GABA release from VLPO neurons would decrease to partially compensate for the presence of the drug. This dampened GABA release profile accounts for the rebound insomnia that is commonly observed when stopping a treatment after long-term use. Activation of the sleep machinery is directly affected by benzodiazepines and non-benzodiazepines and this may have consequences for the quality of sleep and the memory consolidation that occurs while using a sleep aid.

Several other drugs with novel mechanisms of action have been approved, including drugs targeting melatonin receptors, the (H1R), or orexin receptors. Compared with drugs acting on GABA receptors, these drugs have a lower risk of abuse or dependence. Pernix’s Silenor (doxepin), which is a antidepressant that selectively antagonizes H1Rs at low doses, is not associated with residual next-day effects but is not particularly differentiated from Benadryl (), an over-the-counter that is used off-label as a sleep aid.

In addition, doxepin is not effective for problems initiating sleep due to a particularly long Tmax of 3.5 hours. Melatonin is available as an over-the-counter dietary supplement in the US, raising questions about whether Takeda’s Rozerem (ramelteon) is sufficiently differentiated to justify branded pricing. The efficacy of drugs targeting the melatonin receptors may not last and these drugs may only benefit a small subset of patients whose trouble sleeping has a circadian component.

Merck’s Belsomra (suvorexant) was the first approved insomnia drug that targets orexin signaling. Rather than suppressing the brain to sleep, suvorexant blocks the activity of a key wake-promoting neuropeptide, orexin. This is hypothesized to promote a more natural sleep process, and there is some research indicating that this is the case.52 Suvorexant blocks both the OX1 and OX2 receptors, although more recent research has shown that the drug’s sleep promoting effects occur through antagonism of only the OX2 receptor. The drug has a 2 hour time to maximum concentration (Tmax), resulting in a slower onset of action relative to most other sleep aids.53 The Tmax can be even longer if not taken on an empty stomach. In addition, the drug has a long half-life, longer than most other sleep aids, making it prone to cause problems of next-day drowsiness. In 2014, the FDA approved a lower dose range (5 – 20 mg) of suvorexant than originally sought by Merck due to concerns about next-day drowsiness and drowsy driving. Although targeting the orexin system is likely the ideal strategy for treating insomnia, based on what we presently

52 Ma, AJ, et al., 2014. Electroencephalographic power spectral density profile of the orexin receptor antagonist surorexant in patients with primary insomnia and healthy subjects. Sleep, 37(10), pp1609-1619. 53 Lee-Iannotti, JK and Parish, JM, 2016. Suvorexant: a promising, novel treatment for insomnia. Neuropsychiatric Disease and Treatment, 12, 491-495.

Page 27 April 19, 2017 know about sleep physiology, the PK/PD problems associated with suvorexant leave plenty of room for improvement.

Insomnia Market Information

Epidemiology. Insomnia is thought to affect roughly 10% of adults including the vast majority of people suffering from major depressive disorder (MDD). In Figure 21, we estimate the total number of people who suffer from insomnia and use sleep aids both in the US and Europe. We based our estimate on the following assumptions:

▪ Adult Population – According to the CDC, roughly 22.9% of the US population is under 18 years old, which translates to an adult population of roughly 247 million. We assume a similar percentage of the European population is under 18 years old. ▪ People with Insomnia Symptoms – We estimate that roughly 30% of adults experience insomnia symptoms.54 ▪ Use of Sleep Aids – According to the CDC, approximately 1 in 8 adults with sleep problems use sleep aids to fall asleep.55

Figure 21. Prevalence of Insomnia and Use of Sleep Aids in Adults in the US and Europe

US Europe Population 320 M 740 M Adult Population (77%) 247 M 571 M People with Insomnia Symptoms (30%) 73 M 171 M People who Use Sleep Aids (13%) 9.6 M 22.3 M

Source: LifeSci Capital

Figure 22 highlights data from the CDC on the use of prescription sleep aids, broken down by age group. Across the entire population, there is a 4.1% rate of recent sleep aid use. This rate is only 1.8% in adults 20 to 39, and raises to 7.0% in individuals over 80 years old.

54 Roth, T, 2007. Insomnia: Definition, Prevalence, Etiology, and Consequences. Journal of Clinical Sleep Medicine, 3(5 suppl.), pp7- 10. 55 Chong, Y, et al., 2013. Prescription Sleep Aid Use Among Adults: United States, 2005–2010. NCHS Data Brief No. 127.

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Figure 22. Percentage of Adults Using Prescription Sleep Aids in the Last 30 Days

8% 7.0%

6.0% 5.7% 6% 5.5% 4.9%

4.1% 4%

1.8% 2%

0% All 20-39 40-49 50-59 60-69 70-79 80+

Source: Centers for Disease Control and Prevention

Potential in Treating Major Depressive Disorder. There is a large market opportunity in treating insomnia in MDD patients. This indication may represent the most pressing unmet need in treating insomnia, and consequently the best opportunity for premium pricing. Minerva is pursuing this indication as well as primary insomnia, and we expect that the MDD indication could more than double the size of their potential market.

Market Size. Insomnia leads to a substantial economic burden, largely resulting from work absences and lost productivity. In the US, treating insomnia results in annual costs of $63 billion and 253 million days of lost work productivity due specifically to insomnia.56 Despite several new entrants, the total market for sleep aids has been shrinking in dollar terms due to increased generic competition. The US market is currently dominated by zolpidem, the active ingredient in Ambien, which accounts for roughly 75% of prescriptions. Merck’s Belsomra (suvorexant), which is the only approved product targeting orexinergic signaling, is the sole product with no generic competition and currently represents about 7% of prescriptions.

Figure 23 shows the branded monthly pricing in the US for approved sleep aids, which ranges from $300 to $. However, all of these drugs with the exception of Belsomra (suvorexant) face heavy generic competition that has substantially reduced the average prices paid. For example, while the unit price for Ambien is $19.17, the generic pill can be bought for $0.10. Increased generics have reduced the market share of branded insomnia drugs from 22% of total prescriptions in 2010 to 2%. In light of the price erosion resulting from generic competition, the $368 monthly price for Belsomra reflects a large premium over what people pay for generic sleep aids. Johnson & Johnson and Minerva would likely need to show an improvement in the safety profile of JNJ-10397049 over Belsomra in order to justify a pricing premium to payers.

56 Sivertsen, B, et al., 2011. The Economic Burden of Insomnia at the Workplace. An Opportunity and Time for Intervention? Sleep, 34(9), pp1151-1152.

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Figure 23. Branded Monthly Pricing for Approved Sleep Aids

Drug Company Monthly Price

Ambien/Ambien CR (zolpidem) Sanofi $575 * Sonata (zaleplon) Pfizer $315 * Lunesta (eszopiclone) Sumitomo Dainippon Pharma $514 * Rozerem (ramelteon) Takeda $403 Edluar (zolpidem) Mylan Pharmaceuticals $445 * Silenor (doxepin) Pernix Therapeutics $485 * Intermezzo (zolpidem) Purdue Pharma $408 * Belsomra (suvorexant) Merck $368 * Face generic competition

Source: LifeSci Capital

Clinical Data Discussion for MIN-202

Johnson & Johnson has conducted a wide range of Phase I studies evaluating safety, tolerability, pharmacokinetics, and drug-drug interactions. The companies have reported positive topline results from a Phase IIa study for MIN-202 and expects to launch another Phase II study in the second half of 2017. A summary of the companies’ clinical trials for MIN-202 is shown in Figure 24.

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Figure 24. Summary of Clinical Trials for MIN-202

Trial N Year Completed Focus

Proof-of-Concept Study 39 2011 Safety, tolerability, and pharmacokinetics Phase Ib Study in MDD Patients 20 2014 Sleep effects Safety, tolerability, pharmacokinetics, and Phase I Study 40 2014 pharmacodynamics Phase I Study with 16 2015 Drug-drug interactions with itraconazole Phase I Study in MDD Patients 49 2015 Safety, efficacy, and biomarkers Phase I Study with Rabeprazole 16 2015 Drug-drug interactions with rabeprazole Phase IIa Study in Primary 92 2015 Safety, tolerability, and efficacy Insomnia SAD Phase I Study in Japan 24 2015 Safety, tolerability, and pharmacokinetics Drug-drug interactions with and MAD Phase Ib Study 18 2016 warfarin Pilot Study on Driving and Duration of effects on car driving and 36 2016 Cognitive Performance cognitive performance Phase I Study 14 2016 Drug-drug interactions with rifampin Age and gender effects on Age and Gender Study 100 - pharmacokinetics Absorption, distribution, , and ADME Study 8 -

Source: LifeSci Capital

Single-Ascending Dose (SAD) Phase I Trial

In 2011, Johnson & Johnson conducted a Phase I single-ascending dose (SAD) proof-of-concept study in 39 healthy male volunteers.57 In this trial, subjects were randomized to receive a single dose of MIN-202 or placebo. The first 3 subjects were randomized 2:1 to receive either 10 mg of MIN-202 or placebo. Subsequent cohorts had 6 subjects receiving active drug in doses of 10 mg, 20 mg, 40mg, and 80 mg doses, and 3 received placebo. Subjects were assessed in the clinic for at least 72 hours after dosing and again at a follow-up visit 1-2 weeks after dosing.

The trial demonstrated a linear dose-response curve, shown in Figure 25, with a time to maximum concentration

(tmax) ranging from 0.33 to 0.5 hours and a half-life of roughly 2 hours. Somnolence, the expected effect of the drug, was observed at all doses tested. Overall, 85% (22/26) subjects receiving MIN-202 experienced somnolence, compared with 23% (3/13) of subjects in the placebo group. This effect appeared to be dose-dependent with 100% of the 40 mg cohort experiencing somnolence. The time to the onset of somnolence ranged from 10 to 40 minutes

57 Bonaventure, P, et al., 2015. Characterization of JNJ-42847922, a Selective Orexin-2 Receptor Antagonist, as a Clinical Candidate for the Treatment of Insomnia. Journal of Pharmacology and Experimental Therapeutics, 354, pp471-482.

Page 31 April 19, 2017 with a mean of roughly 20 minutes. At 2 hours, subjects treated with MIN-202 showed significantly higher sleepiness scores compared with the placebo group, as measured by the Stanford Sleepiness Score (10 mg: p=0.023; 20 mg: p=0.017; 40 mg and up: p<0.0001).

Figure 25. Plasma Concentrations of MIN-202 Over 12 Hours

Source: Bonaventure et al., 2015

In terms of safety, there were no serious adverse events (SAEs), and all AEs in the trial were considered to be mild or moderate in severity. In addition, there were no deaths and no discontinuations due to an AE. Aside from somnolence, the most common AEs in the study were headache (12% for MIN-202 vs. 0% for placebo) and dizziness (12% for MIN-202 vs. 8% for placebo). One subject receiving the 80 mg dose experienced a single, brief episode of cataplexy while transitioning from wake to sleep.

Single-Ascending Dose (SAD) Phase I Trial in Japan

Trial Design. This randomized, double-blind, placebo controlled Phase I study tested the safety, tolerability, and pharmacokinetics of a single dose of MIN-202 in 24 healthy Japanese volunteers.58 Subjects enrolled into the trial were randomized to receive 5 mg, 20 mg, or 40 mg of MIN-202 or placebo in fasting conditions. The primary endpoint was the number of subjects experiencing an adverse event (AE) or a serious adverse event (SAE) up to 8 days following dosing with MIN-202. Secondary endpoints consisted of the Stanford Sleepiness Scale (SSS) as well as a variety of pharmacokinetics parameters, including maximum concentration (Cmax), time to Cmax (tmax), and elimination half-life

(t1/2).

Trial Results. All of the doses tested in the study were safe and well-tolerated, and the results in the healthy Japanese volunteers closely matched prior results in healthy non-Asian study volunteers. In addition, there were no clinically- relevant safety signals identified in the trial. Somnolence was the most commonly reported adverse event in the trial, although this is the intended effect of the drug and the key to its clinical value as a potential insomnia drug.

58 https://clinicaltrials.gov/show/NCT02555124

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Phase Ib Trial in Patients with Major Depressive Disorder

Trial Design. This randomized, double-blind, placebo controlled Phase Ib 4-way crossover study evaluated the safety and efficacy of MIN-202 in treating insomnia in 20 individuals with major depressive disorder (MDD).59 Enrolled subjects were randomized to one of 4 treatment sequences, consisting of 10 mg, 20 mg, and 40 mg of MIN-202 or placebo. Treatment periods consisted of a single dose and each was separated by one week. The primary endpoint was the latency to persistent sleep (LPS) on day 1. Secondary endpoints evaluated were:

▪ Sleep – total sleep time, sleep efficiency, total time spent awake, total time spent in deep sleep.

▪ Pharmacokinetics – maximum concentration (Cmax), time to reach Cmax, area under the plasma concentration

curve through 12 hours post-dosing (AUC0-12), total proportion of MIN-202 excreted in the , renal clearance (CLR), and cortisol concentration in saliva at wake-up and 30 minutes after waking up. ▪ Safety – adverse events (AE), suicide ideation or behavior, as measured by the Columbia Suicide Severity Rating Scale (CSSRS), and depressive symptoms. ▪ Next-day residual effects – sleepiness, mood, body movements, and saccadic eye movements.

Trial Results. Overall, the drug was considered to be safe and well-tolerated. Figure 26 highlights the main sleep effects observed in the trial. Treatment with MIN-202 resulted in a shorter time to sleep onset, greater sleep efficiency, and longer sleep duration. Subjects treated with the 40 mg dose experienced a 60 minute decrease in the time to sleep onset compared to placebo treatment (p<0.001), reflecting a 75% reduction in the time to fall asleep. These patients also had a 45 minute longer sleep duration than during the placebo treatment period (p<0.001).

Figure 26. Sleep Effects of MIN-202 in MDD Patients with Insomnia

Source: Corporate Presentation

59 https://clinicaltrials.gov/show/NCT02067299

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Multiple-Ascending Dose (MAD) Phase Ib Trial

Trial Design. This randomized, double-blind, placebo controlled Phase I study tested the safety, tolerability, pharmacokinetics, and pharmacodynamics in healthy male and female volunteers.60 Following a screening period, enrolled subjects were randomized to receive 5 mg, 10 mg, 20 mg, or 40 mg of MIN-202 or placebo during the 10- day double-blind treatment period. The primary outcome measures were heart rate and systolic and diastolic blood pressure when supine and standing, as well as tympanic temperature, electrocardiogram (ECG), Columbia Suicide Severity Rating Scale (C-SSRS), adverse events (AE), laboratory tests including hematology, clinical chemistry, and urinalysis, and physical and neurological examination. Secondary endpoints included a range of pharmacokinetic and pharmacodynamic parameters. The trial also assessed sedation, mood, and the addictive potential of MIN-202.

Trial Results. In January 2015, Johnson & Johnson announced topline results from this study, reporting that the drug was generally safe and well-tolerated. The trial demonstrated that the 5 mg dose was sufficient to elicit sedation. Doses of MIN-202 greater than or equal to 20 mg resulted in daytime sleepiness. Plasma exposure was dose proportional for doses in the range of 5 mg to 20 mg, although this dose relationship was less pronounced at higher doses.

Solid Dose Bioavailability Phase I Trial

This trial evaluated the safety, tolerability, and pharmacokinetics of a solid formulation of MIN-202 instead of the liquid formulation that had been tested in previous trials. The trial showed that this new formulation had comparable pharmacokinetics, permitting the continued development of a tablet form of MIN-202.

Phase IIa Trial

Trial Design. This randomized, double-blind, placebo controlled Phase IIa two-period crossover study evaluated MIN-202 in 28 insomnia patients without psychiatric comorbidities.61 Enrolled subjects were randomized to one of 2 treatment sequences, consisting of 40 mg of MIN-202 or placebo, for 5 day periods with a 5-9 day washout in between treatment periods. Thus, patients served as their own controls. The primary endpoint was sleep efficiency through night 5, as measured by polysomnography (PSG). Sleep efficiency is measured as the ratio of total sleep time to total recording time. Secondary endpoints included:

▪ Total sleep time. ▪ Total wake time after sleep onset. ▪ Number of awakenings. ▪ Total time in deep sleep. ▪ Mean latency to persistent sleep. ▪ Leeds Sleep Evaluation Questionnaire (LSEQ). ▪ Next morning residual effects relating to sleepiness, cognition, and mood. ▪ Number of subjects with AEs.

60 https://clinicaltrials.gov/show/NCT02230878 61 https://clinicaltrials.gov/show/NCT02464046

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Trial Results. The trial demonstrated that treatment with MIN-202 led to statistically significant improvements in sleep compared with placebo. Figure 27 displays the difference in sleep efficiency between MIN-202 and placebo, measured at both day 1/2 and day 5/6. At day 1/2, MIN-202 treatment led to a 5.8% increase in sleep efficiency relative to placebo (p<0.001); at day 5/6, use of MIN-202 resulted in an 8.1% increase in efficiency compared with data from the placebo period (p<0.001).

Figure 27. Sleep Efficiency Following Treatment with MIN-202 or Placebo

Source: Corporate Presentation

Figure 28 highlights the change in total sleep time following treatment with MIN-202 or placebo. MIN-202 treatment was associated with a 27.8 minute increase in sleep time at day 1/2 and 39 minutes at day 5/6 (p<0.001). The Company also reported statistically significant effects on key secondary parameters, such as latency to persistent sleep, time awake after sleep onset, and total sleep time.

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Figure 28. Total Sleep Time Following Treatment with MIN-202 or Placebo

Source: Corporate Presentation

MIN-202 was considered safe and well-tolerated with no serious adverse events reported in the study. The most common treatment-emergent adverse events (TEAE) were somnolence and abnormal dreams.

Other Insomnia Drugs in Development

There are several other drugs in development to treat insomnia, although few have mechanisms of action that are differentiated from already approved drugs. Figure 29 lists the late-stage drugs in development for insomnia. Both and ACT-541468 are dual antagonists of the OX1 and OX2 receptors, much like Merck’s (NYSE: MRK) Belsomra (suvorexant), and represent the most direct competition for Minerva, since these drugs all target orexin signaling. However, the selectivity of Minerva’s drug—only targeting the OX2 receptor—may be a key advantage over other orexin antagonists that have been tested as treatments for insomnia. Studies in knockout mice have shown that the beneficial effect of orexin antagonists results from blockade of the OX2 receptor not the OX1 receptor, so eliminating binding at the OX1 receptor could reduce the potential for adverse effects. Neurim Pharmaceuticals’ piromelatine reflects a strategy of targeting melatonin and serotonin receptors, although questions remain as to whether piromelatine is sufficiently different from endogenous melatonin or other approved melatonin agonists.

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Figure 29. Other Insomnia Drugs in Development

Drug Company Stage Target

Lemborexant Eisai/Purdue Pharma III Both orexin receptors ACT-541468 Actelion Pharmaceuticals II Both orexin receptors MIN-202 Johnson & Johnson/Minerva II Orexin 2 receptor Piromelatine Neurim Pharmaceuticals II Melatonin, 5-HT1, and 5-HT2B receptors

Lorediplon Grupo Ferrer II GABAA receptor

AP-ZP Intec Pharma II GABAA receptor

SKP-1041 Somnus Therapeutics II GABAA receptor

Source: LifeSci Capital

Lemborexant – Eisai/Purdue Pharma (private). Lemborexant is a dual orexin antagonist that was discovered by Eisai and is being developed in collaboration with Purdue Pharma. The companies are currently conducting two Phase III trials to evaluate the safety and efficacy of lemborexant and topline results from the first trial may be available in the second half of 2017.62,63 Compared with suvorexant, lemborexant has higher potency at both the OX1 and OX2 receptors.64 Eisai has reported results from a Phase II study evaluating lemborexant, which demonstrated that treatment with the drug led to a shorter latency to persistent sleep (LPS) and less wake time after sleep onset (WASO). In the trial, 291 enrolled subjects were randomized to receive one of 6 doses of lemborexant—1 mg, 2.5 mg, 5 mg, 10 mg, 15 mg, or 25 mg—or placebo for 15 days. Treatment with the 2.5 mg dose of lemborexant or greater led to a significant reduction in LPS, whereas the 10 mg dose or greater was necessary to see a significant effect on WASO. In addition, only the 25 mg dose cohort experienced a statistically significant increase in next-day residual sleepiness, suggesting that therapeutic doses of lemborexant may avoid some of the safety issues observed with suvorexant.

ACT-541468 – Idorsia/Actelion Pharmaceuticals (SIX: ATLN.VX). ACT-541468 is a dual orexin antagonist that is being developed as a follow-on product to almorexant, another dual orexin antagonist in development for insomnia that was suspended in 2011 due to safety concerns. Little is presently known about how ACT-541468 differs from almorexant. Actelion launched two Phase II studies for ACT-541468 in the fourth quarter of 2016 and data readouts from these trials are likely in the second half of 2017. In January, Actelion announced plans to be acquired by Johnson & Johnson and the intention to spin off part of the development pipeline into a new company called Idorsia. Thus, ACT-541468 will be developed by Idorsia going forward. Data from the Phase II studies, one in adults and one in elderly subjects, will provide important information on whether ACT-541468 is sufficiently differentiated from almorexant to avoid the same safety issues faced by that drug.

62 https://clinicaltrials.gov/show/NCT02783729 63 https://clinicaltrials.gov/show/NCT02952820 64 Coleman, PJ, et al., 2017. The Discovery of Suvorexant, the First Orexin Receptor Drug for Insomnia. Annual Review of Pharmacology and Toxicology, 57(1), pp509-533.

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Lorediplon – Grupo Ferrer (private). Lorediplon, which is a non-benzodiazepine from the same drug class as zaleplon, is an agonist of the GABAA receptor, much like many of the approved sleep aids today. The drug is thought to have a longer half-life than other GABAA agonists, which could result in improvements in sleep maintenance. In February 2017, the company reported interim results from a Phase IIa dose-finding study in 145 patients. Enrolled subjects treated with lorediplon experienced a 19 minute decrease in mean wake time after sleep onset (WASO) with the 5 mg dose and a 23 minute decrease with the 10 mg dose (p<0.0001). In addition, lorediplon was associated with a significant decrease in WASO during the second half of the night compared with zolpidem (p<0.05), although specific values were not provided for this endpoint. These results provide an early indication of efficacy for lorediplon. However, LPS data and more detail on the safety and tolerability profile will be important in further evaluating the potential of this product. Grupo Ferrer expects to release full data in the second half of 2017.

Piromelatine - Neurim Pharmaceuticals (private). Piromelatine is a novel agonist of melatonin receptors, much like Neurim’s approved product, Circadin, but with additional activity at serotonin 5-HT1A and 5-HT1D receptors. Melatonin is an endogenous molecule released from the pineal gland at night that plays an important role in maintaining the normal circadian rhythm. The thinking behind this product is that the drug’s activity at melatonin receptors may have sleep-promoting effects, while the 5-HT effects could reduce anxiety and/or depressive symptoms in co-morbid insomnia. Neurim has completed a Phase II study evaluating the safety and efficacy of piromelatine in patients with primary or co-morbid insomnia.65 Topline results from the study showed that that piromelatine therapy was associated with a statistically significant reduction in wake time after sleep onset (WASO) with either the 20 mg or 50 mg doses (p=0.02). The 50 mg dose was also associated with significant improvements in total sleep time, NREM sleep duration, and sleep efficiency (p<0.05). In March 2017, Neurim launched the ReCOGNITION Phase II study to assess piromelatine in patients with Alzheimer’s disease (AD), a neurodegenerative condition that is associated with both poor sleep and cognitive decline.66 This trial, which is testing 5 mg, 20 mg, and 50 mg doses of piromelatine, is likely to read out in the second half of 2018.

AP-ZP (Accordion Pill-Zaleplon) – Intec Pharma (NasdaqCM: NTEC). AP-ZP is a controlled-release formulation of Pfizer’s Sonata (zaleplon) based on Intec’s Accordion Pill technology. In 2011, Intec reported data from two Phase II studies with AP-ZP, stating that AP-ZP treatment led to a significant reduction in latency to persistent sleep (LPS) and an increase total sleep time (TST). The Company also stated that no residual effects were observed the next morning in patients treated with AP-ZP. Detailed results from the trial have not been provided and there have been no recent updates on this program.

MIN-117: A Novel Antidepressant to Address Unmet Needs in Treating Depression

MIN-117 is a novel antidepressant drug candidate with a unique receptor binding profile that is currently in development for the treatment of major depressive disorder (MDD), a severe form of depression that is estimated to affect roughly 30% of individuals at least once in their lifetime. Common drug treatments such as selective serotonin reuptake inhibitors (SSRIs) and serotonin-norepinephrine reuptake inhibitors (SNRIs) remain inadequate for most patients with only approximately one third achieving remission with initial treatment.67 In addition, there is a several week delay between the initiation of antidepressant therapy and the emergence of a clinical response as well as a range

65 https://clinicaltrials.gov/ct2/show/NCT01489969 66 https://clinicaltrials.gov/ct2/show/NCT02615002 67 Trivedi, MH and Daly, EJ, 2008. Treatment strategies to improve and sustain remission in major depressive disorder. Dialogues in Clinical Neuroscience, 10, pp377-384.

Page 38 April 19, 2017 of side effects that discourage treatment compliance. More than half of patients taking antidepressants experience sexual dysfunction, and antidepressants are also associated with high rates of weight gain and reduced sleep quality.68 This results in a majority of patients changing or discontinuing therapy within the first year.69 Minerva expects that due to its differentiated mechanism of action, MIN-117 could be an effective therapy for a wider range of patients and with a faster onset and a cleaner safety profile than currently addressed with approved antidepressants.70 Figure 30 shows the molecular structure of MIN-117. Minerva announced positive results from a Phase IIa study in May 2016 and expects to launch a US-based Phase IIa trial in late 2017.

Figure 30. Molecular Structure of MIN-117

Source: Mansari and Blier, 2008 71

Mechanism of Action. Pharmacological intervention for MDD is based upon increasing levels of involved in mood regulation such as dopamine, norepinephrine, and most notably, serotonin. SSRIs, the most commonly prescribed class of antidepressants, increase serotonin concentrations in the brain by inhibiting the activity of the serotonin transporter (5-HTT), a protein responsible for clearing serotonin from the synaptic cleft. Serotonin and norepinephrine reuptake inhibitors (SNRIs) block 5-HTT as well as the norepinephrine transporter (NET). MIN- 117 acts similarly to SSRIs in that it actively inhibits 5-HTT.72,73 However, MIN-117 has additional activity as an antagonist of the 5-HT1A and 5-HT2A receptors. This additional antagonist activity may be beneficial, since the 5-HT1A receptors are autoreceptors that inhibit serotonin release when exposed to rising serotonin levels. These autoreceptors result in a several week delay to achieving a clinical response, since the autoreceptors counteract the effects of the 5-

68 Ferguson, JM, 2001. SSRI Antidepressant Medications: Adverse Effects and Tolerability. Primary Care Companion to the Journal of Clinical Psychiatry, 3, pp22-27. 69 Solem, CT, 2016. Analysis of treatment patterns and persistence on branded and generic medications in major depressive disorder using retrospective claims data. Neuropsychiatric Disease and Treatment, 12, pp2755-2764. 70 Davidson, M, et al., 2016. MIN-117: A Randomized, Double-Blind, Parallel-Group, Placebo- and Active-Controlled Study to Evaluate Efficacy and Safety in Patients with Major Depressive Disorder. American College of Neuropsychopharmacology Annual Meeting, Poster T132. 71 El Mansari, M & Blier, P, 2008. electrophysiological assessment of the putative antidepressant Wf-516 in the rat raphe dorsalis, locus coeruleus and hippocampus. Naunyn-Schmiedeberg's archives of pharmacology, 376, pp351-361. 72 El Mansari, M, and Blier, P, 2008. In vivo electrophysiological assessment of the putative antidepressant Wf-516 in the rat raphe dorsalis, locus coeruleus and hippocampus. Naunyn-Schmiedeberg's Archives of Pharmacology, 376, pp351-361. 73 Saijo, T, et al., 2009. Utility of small-animal positron emission tomographic imaging of rats for preclinical development of drugs acting on the serotonin transporter. International Journal of Neuropsychopharmacology, 12, pp1021-1032.

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HTT blockade.74 After several weeks, these receptors typically desensitize, allowing for 5-HTT blockade to induce a meaningful effect. In fact, SSRIs and SNRIs can be administered with a 5-HT1A antagonist in order to block these autoreceptors and accelerate the emergence of a clinical response.75 Minerva has hypothesized that MIN-117 may be able to accelerate the clinical effects of 5-HTT as a result of its antagonist properties at the 5-HT1A receptor and early clinical data do show a more rapid response than existing antidepressants.

Preclinical Data

Investigators conducted a preclinical study in rats to evaluate the agonist and antagonist properties of MIN-117.76 To test for 5-HT1A activity, rat neurons in the dorsal raphe nucleus were treated with lysergic acid diethylamide (LSD), a potent 5-HT1A agonist that is known to reduce 5-HT neuronal firing. As shown in Figure 31, MIN-117 was able to dampen the effect of LSD on 5-HT neuron firing rate, indicating that the drug blocks 5-HT1A receptors.

Figure 31. MIN-117 Attenuates LSD-induced 5-HT1A activation

Source: El Mansari et al., 2008

A similar experiment was performed to show antagonism of 5-HT2A in the locus coeruleus (LC), a cluster of norepinephrine neurons located in the pons. Locus coeruleus neurons were treated with DOI, a known 5-HT2A agonist that reduces the firing rate of norepinephrine neurons. Figure 32 shows that this effect was also attenuated with MIN-117 treatment.

74 Celada, P, et al., 2004. The therapeutic role of 5-HT1A and 5-HT2A receptors in depression. Journal of Psychiatry and Neuroscience, 29(4), pp252-265. 75 Blier, P and de Montigny, C, 1994. Current advances and trends in the treatment of depression. Trends in Pharmacological Sciences, 15(7), pp220-226. 76 El Mansari, M and Blier, P, 2008. In vivo electrophysiological assessment of the putative antidepressant Wf-516 in the rat raphe dorsalis, locus coeruleus and hippocampus. Naunyn-Schmiedeberg's archives of pharmacology, 376, pp351-361.

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Figure 32. MIN-117 Attenuates DOI Induced 5-HT2A Activation

Source: El Mansari et al., 2008

Finally, 5-HTT inhibition through MIN-117 treatment was demonstrated through an assay measuring neuronal recovery time to normal firing after exogenous application of serotonin. Upon treatment with large doses of exogenous serotonin, 5-HT neurons enter into a refractory period where no further serotonin is released until the exogenous serotonin is removed by 5-HTT. Therefore, 5-HTT inhibition increases the recovery time after serotonin application. As shown in Figure 33, MIN-117 treatment lead to a 50% increase in recovery time with successive dosing of the drug.

Figure 33. MIN-117 Inhibits 5-HTT, increasing recovery time after neurons are treated with exogenous serotonin

Source: El Mansari et al., 2008

These results were further corroborated in subsequent PET scan studies, which visualized both 5-HTT and 5-HT1A receptor occupancy by MIN-117 and other relevant drugs in key regions of the brain.6,7 A preclinical study assessing the effectiveness of MIN-117 in a validated rat model of depression also showed positive results.10 In this study, rats were subjected to different types of stress resulting in abnormal behavior and decreased sucrose solution consumption. MIN-117 treatment restored sucrose consumption levels to normal in the chronically stressed group, and had no

Page 41 April 19, 2017 apparent effect on a control group. Furthermore, the effect of the treatment was similar in magnitude to that of , a powerful antidepressant that is not typically utilized clinically due to its side effects. Most notable was the observation that MIN-117 treatment achieved statistically significant results in just 2 weeks, compared to the 4 weeks required for imipramine to take effect. These results highlight the efficacy of the drug and provide some evidence that MIN-117 may have a shortened lag period prior to eliciting a clinical response compared to current drugs.

Safety Profile. To date, MIN-117 has been considered to be safe and well-tolerated. Phase IIa results have suggested that MIN-117 has a limited side effect profile.5 In the trial, enrolled subjects were evaluated for a wide range of adverse events (AEs), such as sleep disruptions, sexual dysfunction, cognitive difficulties, EKG changes, and others. The type and frequency of AEs did not differ significantly between subjects receiving MIN-117 or placebo. In addition, subjects treated with MIN-117 did not show signs of sexual or cognitive dysfunction, suicidal ideation, or weight gain. In contrast to paroxetine, the SSRI comparator used as a positive control in this study, MIN-117 did not have a negative impact on sleep.

Major Depressive Disorder (MDD)

Major depressive disorder (MDD) is a common and debilitating mental disorder characterized by constant, intense feelings of sadness. According to the World Health Organization (WHO), an estimated 350 million people worldwide including 15 million individuals in the US develop a major depressive episode within a given year. MDD is one of the most prevalent mental illnesses across all demographics. MDD follows a chronic course of repeated bouts of remission and recurrence in about 50% of people affected.77 The chronic nature of MDD makes it the leading cause of years lost to disability in the world, and MDD patients are more likely to commit suicide. Roughly 2% of MDD patients treated as outpatients, and 4% of those hospitalized because of their condition, commit suicide.78 In addition, these patients exhibit a higher mortality rate even after controlling for suicide.79 Due to the prevalence and severity of MDD, the treatment of this disorder is a pressing concern for mental health professionals. Despite a large number of FDA- approved treatments for MDD, 20-40% of people diagnosed with the disorder continue to suffer from significant symptoms even after multiple attempts at therapy treatment attempts.80,81

Causes and Pathogenesis. The precise cause of MDD is unclear, and the heterogeneity of the condition has complicated attempts to better understand the pathophysiology.82 Researchers believe that a combination of genetic and environmental risk factors lead to the development of the disorder. Genetic factors are thought to contribute to

77 Crown, WH et al., 2002. The impact of treatment-resistant depression on health care utilization and costs. Journal of Clinical Psychiatry, 63(11), pp963-971. 78 Bostwick, JM & Pankratz, VS, 2000. Affective disorders and suicide risk: a reexamination. American Journal of Psychiatry, 157(12), pp1925-1932. 79 Penninx, BW, et al., 1999. Minor and major depression and the risk of death in older persons. Archives in General Psychiatry, 56(10), pp889-895. 80 Rush, AJ, et al., 2006. Acute and longer-term outcomes in depressed outpatients requiring one or several treatment steps: a STAR*D report. American Journal of Psychiatry. 163(11), pp1905-1917. 81 Kessler, RC, et al., 2003. The epidemiology of major depressive disorder: results from the National Comorbidity Survey Replication (NCS-R). Journal of the American Medical Academy, 289(23), pp3095-3105. 82 Hasler, G, 2010. Pathophysiology of depression: do we have any solid evidence of interest to clinicians? World Psychiatry, 9(3), pp-155-161.

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30-40% of a person’s susceptibility to MDD.83 The remaining susceptibility for MDD stems from individual-specific environmental factors, such as past and ongoing adverse events and stress in one’s life including childhood sexual abuse, marital problems, and other types of psychological trauma.84 A recent genome-wide association study (GWAS) has identified genetic loci associated with severe MDD.85 However, none of the identified genes are necessary or sufficient for MDD to manifest, and a previous GWAS including patients with mild and moderate MDD did not produce any significant results.86 Most likely, many genes contribute a small amount of risk, and the combination with environmental stressors leads to the development of MDD in individuals.

Treatment. Treatment for patients diagnosed with major depressive disorder by DSM-IV criteria varies by disease severity. For patients with mild to moderate depression, first line treatment is usually psychotherapy, especially if the patient is able to identify particular stressors or sources of depressive symptoms. For some of these patients, pharmacotherapy may be used to supplement psychotherapy. For patients with moderate depression, pharmacotherapy with or without psychotherapy is the recommended initial treatment. For patients with severe depression, pharmacotherapy or alternative somatic treatment with electroconvulsive therapy may be an option.87

Current oral pharmacotherapy is divided into two groups, the older treatment modalities and the newer atypical antidepressants. Older antidepressant treatments focus three monoamine systems—serotonin, dopamine, and norepinephrine. These antidepressants act to increase the concentration of the one or more of aforementioned neurotransmitters at the synapses. There are multiple classes of typical antidepressants including, selective serotonin reuptake inhibitors (SSRIs), serotonin-norepinephrine reuptake inhibitors (SNRIs), tricyclic antidepressants (TCAs), and monoamine oxidase inhibitors (MAOIs). SSRIs and SNRIs represent the first line treatments, and are prescribed most frequently. Their mechanisms of action are the inhibition of neurotransmitter reuptake at the synapse. TCAs, the oldest class of antidepressants, also inhibit the reuptake of serotonin and norepinephrine. MAOIs inhibit the degradation or these two neurotransmitters as well as dopamine.

Atypical antidepressants are a more heterogeneous group with respect to mechanisms of action. These drugs may act on neurotransmitters, their transporters, or their receptors. They include buproprion, , trazadone, and nefazadone. Additional atypicals exist, however they are not approved for use in the United States. Buproprion’s mechanism of action is somewhat unclear as it is only a weak norepinephrine and serotonin reuptake inhibitor. Mirtazapine increases noreprinephrine release and inhibits its reuptake. It also blocks α2 adrenergic receptors and serotonin receptor subtypes. Trazadone and nefazadone are similar to buproprion, acting as weak reuptake inhibitors or norepinephrine and serotonin, but also act as antagonists on serotonin receptors.

Drug side effects play a decisive role in treatment selection and modification, as each class of drugs is associated with a host of side effects, some more severe or more common than others. The most common side effects include

83 Sullivan, PF, et al., 2000. Genetic epidemiology of major depression: review and meta-analysis. American Journal of Psychiatry, 157(10), pp1552-1562. 84 Kendler, KS, et al., 2006. Toward a comprehensive developmental model for major depression in men. American Journal of Psychiatry, 163(1), pp115-124. 85 Cai, N, et al., 2015. Sparse whole-genome sequencing identifies two loci for major depressive disorder. Nature, 523, pp588- 591. 86 Ripke, S et al., 2013. A mega-analysis of genome-wide association studies for major depressive disorder. Molecular Psychiatry, 18(4), pp497-511. 87 American Psychiatric Association. Practice Guideline for the Treatment of Patients With Major Depressive Disorder. 2010.

Page 43 April 19, 2017 gastrointestinal symptoms, sedation, insomnia, weight changes, sexual dysfunction, and cardiovascular or neurological effects. More specifically, older TCAs cause a host of anticholinergic and anti-histaminergic side effects in addition to cardiotoxicity and seizures. This side effect profile ultimately limits their use. MAOI use is limited by the number of interactions with products containing tyramine or other sympathomimetic amines. Among other side effects, SSRIs and SNRIs are known to cause sexual dysfunction and to inhibit cytochrome P450 IID6 enzymes, which has the potential drug-drug interactions. The atypical mirtazapine is known to cause weight gain and sedation while trazadone has been shown to cause the latter in addition to priapism and . On initiation of antidepressant pharmacotherapy, close monitoring for response to treatment and development of side effects is essential.

Optimal treatment for major depressive disorder is absolutely essential. With currently available treatment, only 30- 40% of patients fully respond and see a complete resolution of their symptoms. Furthermore, treated patients often have recurrent episodes of depression, with approximately 75% of treated patients having more than 1 episode within 10 years. This data may be explained by the fact that treatment selection is primarily driven by trial and error. The time of onset and efficacy for both older treatments and newer atypical antidepressants is comparable across classes. Therefore, the initial treatment decision is based largely on side effect profile, previous response to therapy, patient safety and tolerability, drug half-life, potential drug interactions and other drug properties. Patient symptomatology also influences antidepressant selection although there is little evidence to suggest patient symptoms correlate to a response to one drug versus another. Previous patient response, or refractory depression may also create the preference for one antidepressant over another. With no evidence-based predictors of drug response and the frequent presence of other psychiatric comorbidities like generalized anxiety disorder, finding an optimal treatment is quite challenging. Consequently, a large number of patients fail one or more FDA-approved treatments and develop refractory depression.88

MDD Market Information

Epidemiology. Over the course of a year, approximately 6.7% of American adults and 12.5% of adolescents suffer from at least one major depressive episode, making MDD a remarkably common disease.89 Approximately 19% of US adults have experienced major depressive episode during their lifetime.90 In addition, as shown in Figure 34, in young adults and adolescents, this percentage appears to be rising. Roughly twice as many females experience depression compared to males, and a variety of other factors contribute to the likelihood of developing MDD as well.1

88 Block, SG, and Nemerogg, CB, 2014. Emerging antidepressants to treat major depressive disorder. Asian Journal of Psychiatry, 12, pp7-16. 89 Key Substance Use and Mental Health Indicators in the United States: Results from the 2015 National Survey on Drug Use and Health. In: Administration SAMHS, ed.2016. 90 Kessler, RC and Bromet, EJ, 2013. The epidemiology of depression across cultures. Annual review of public health, 34, pp119- 138.

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Figure 34. Incidence of Major Depressive Episodes in the US

Source: SAMHSA 2016

MDD is often recurrent, and at least 50% of those who experience a single episode and 80% of those who experience two episodes will have another in their lifetime.91 An initial course of pharmacological treatment may last approximately 6-12 months, and in the case of recurrence, a patient may be advised to remain on treatment permanently. Only approximately 30% of patients achieve remission from first line treatment.92 Overall, there are an estimated 350 million people worldwide and 18 million people in the United States who suffer from depression.93

Market Size. MDD takes a large economic toll on the population due to both direct costs of treatment and indirect costs incurred as a result of the disease. One study reports that accounting for costs due to comorbidities, suicides, inpatient and outpatient services, pharmaceutical treatment, workplace absenteeism, and disability, MDD costs society $210 billion annually in the US alone. The majority of those costs were unrelated to medication with antidepressant expenditure totaling roughly $9 billion.94

In more recent years, antidepressant sales in terms of the number of prescriptions dispensed has risen. The National Center for Health Statistics reports that 9.0% of the US population reported using an antidepressant in the last 30 days during 2009-2012 up from 6.4% during 1999-2002.95 As Figure 35 demonstrates, past blockbuster antidepressants have had peak annual sales of several billion dollars. Pfizer’s Zoloft (sertraline) leads in peak sales with $3.4 billion in 2004. However, many brand name drug patents have now expired, and the antidepressant market is

91 Burcusa SL, Iacono WG. Risk for recurrence in depression. Clinical psychology review 2007;27:959-85. 92 Gaynes BN, Rush AJ, Trivedi MH, Wisniewski SR, Spencer D, Fava M. The STAR*D study: treating depression in the real world. Cleveland Clinic journal of medicine 2008;75:57-66. 93 World Health Organization, 2016 94 Greenberg PE, Fournier AA, Sisitsky T, Pike CT, Kessler RC. The economic burden of adults with major depressive disorder in the United States (2005 and 2010). The Journal of clinical psychiatry 2015;76:155-62. 95 National Center for Health Statistics. Health, United States, 2015: With Special Feature on Racial and Ethnic Health Disparities. Hyattsville, MD. 2016

Page 45 April 19, 2017 overwhelmingly dominated by generics in terms of total prescriptions dispensed.96 It should be noted that antidepressants are prescribed for other non-depressive indications like anxiety and chronic pain, so not all of these sales are derived from the depression market. Given the large portfolio of generic options available, new entrants into the market would have to demonstrate a differentiated safety and/or efficacy profile in order to capture meaningful market share.

Figure 35. Peak Sales of Popular Antidepressants

Drug Company US Approval Peak Sales Year Peak Sales

Prozac () Eli Lilly 1987 1998 $2.8 B Zoloft (sertraline) Pfizer 1991 2004 $3.4 B Celexa (citalopram) Allergan 1998 2003 $1.5 B Lexapro (escitalopram) Allergan 2002 2008 $2.3 B Cymbalta (duloxetine) Eli Lilly 2004 2012 $5.0 B

Source: LifeSci Capital

Figure 36 shows the market share breakdown for antidepressants in the US. Sertraline, the active ingredient in Pfizer’s Zoloft is the market leader with a 15% market share. Escitalopram, citalopram, fluoxetine, and each account for roughly 10% the antidepressant market as well. This graph likely gives some indication of the potential market penetration a novel antidepressant could achieve.

96 Ventimiglia J, Kalali AH. Generic penetration in the retail antidepressant market. Psychiatry 2010;7:9-11.

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Figure 36. Market Share of Approved Antidepressants in the US

Sertraline Paroxetine 15% 4% Amitryptyline Escitalopram 5% 11%

Venlafaxine ER 6%

Bupropion XL Citalopram 7% 10%

Duloxetine 8% Fluoxetine Trazodone 10% 10% Sertraline Escitalopram Citalopram Fluoxetine Trazodone Duloxetine XL Venlafaxine ER Amitryptyline Paroxetine Bupropion SR Mirtazapine Doxepin Venalfaxine Desvenlafaxine succinate Bupropion HBr Fluvoxamine maleate Imipramine Paroxetine ER

Source: LifeSci Capital

In Figure 37, we estimate the market opportunity for MIN-117 in treating MDD if it is eventually approved. Depending on the data, MIN-117 could potentially be used either as a first line therapy for treatment-naïve subjects or as a new therapeutic option in treatment-resistant patients. Capturing just 5% of the MDD market would translate into sales for Minerva of roughly $1.6 billion in the US alone. Our estimate is based on the following assumptions:

▪ US Population – According to the US Census Bureau, in 2020, the US population will be roughly 335 million. ▪ Antidepressant Use – We assume a rate of 9% monthly use in the US. ▪ Prescriptions for Depression – Antidepressants are prescribed for a large number of non-depressive purposes such as anxiety and chronic pain. Research indicates that only 55% of antidepressant prescriptions are related to depression.97 ▪ Efficacy and Use – Even if the drug is approved, antidepressants are typically only efficacious in about half of patients. Data indicate that in other antidepressants, 50-60% of patients continue use for at least 6 months, and 30-40% of patients continue use for at least 12 months.98 We assume 40% of patients that try MIN-117 will use it for a full year, 20% of patients will use it for a half a year before switching to a different therapy, and 40% of patients will use it for just 3 months. This translates into an average treatment period of 7.2 months.

97 Wong J, Motulsky A, Eguale T, Buckeridge DL, Abrahamowicz M, Tamblyn R. Treatment Indications for Antidepressants Prescribed in Primary Care in Quebec, Canada, 2006-2015. Jama 2016;315:2230-2. 98 Solem CT, Shelbaya A, Wan Y, Deshpande CG, Alvir J, Pappadopulos E. Analysis of treatment patterns and persistence on branded and generic medications in major depressive disorder using retrospective claims data. Neuropsychiatric disease and treatment 2016;12:2755-64.

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▪ Pricing – Brand name antidepressants are often priced in the $200-300/month range. We assume that MIN-117 will be priced at $250/month. This could represent a conservative estimate if MIN-117 improves upon the safety or efficacy profile of standard-of-care.

Figure 37. Scenario Analysis for MIN-117 Sales by US Market Penetration

Market Penetration 1.00% 2.50% 5.00% 7.50% 10.00%

MDD Patients 176,000 440,000 880,000 1,320,000 1,760,000 Avg. Treatment Period 7.2 7.2 7.2 7.2 7.2 Months of Therapy 1.3 M 3.2 M 6.3 M 9.5 M 12.7 M Treatment Cost/Month 250 250 250 250 250 Revenue from MIN-117 $317 M $792 M $1,584 M $2,376 M $3,169 M

Source: LifeSci Capital

Clinical Data Discussion for MIN-117

Minerva has completed two Phase I trials and one Phase IIa trial evaluating the safety, tolerability, pharmacokinetics, and efficacy of MIN-117. All of these trials have been conducted outside of the US. Results to date indicate that MIN- 117 may achieve meaningful reductions in depression with no observed effects on sleep, sexual function, or weight gain. Minerva has filed an Investigational New Drug (IND) application and the Company announced in December that the FDA had accepted the IND. Planning is currently underway for a US-based Phase IIa trial and the Company expects to launch this study in late 2017.

Phase IIa Trial Testing Daily Administration of MIN-117 to Treat Major Depressive Disorder

Minerva conducted a Phase IIa trial in Europe to evaluate the safety, tolerability, and efficacy of two dosages of MIN- 117 in MDD patients.

Trial Design. This randomized, double-blind, active and placebo-controlled Phase IIa trial measured the safety and efficacy of MIN-117 in 84 adult MDD patients.99 Enrolled subjects were randomized in a 1:1:1:1 ratio to receive 0.5 mg MIN-117, 2.5 mg MIN-117, 20 mg paroxetine, or placebo. The primary endpoint was the change in depressive symptoms from baseline to week 6 of treatment, as measured by the Montgomery-Asberg Depression Rating Scale (MADRS). The trial also included a number of secondary endpoints to further measure efficacy and side effects, including:

99 https://www.clinicaltrialsregister.eu/ctr-search/trial/2015-000306-18/LV

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▪ Changes in cognition over 6 weeks. ▪ Change in sexual function over 6 weeks. ▪ Changes in Clinical Global Impression of Severity (CGI-S) and Clinical Global Impression of Improvement (CGI-I) scales over 6 weeks. ▪ Response rate, as defined by a decrease in MADRS score of > 50% over 6 weeks. ▪ Time to clinical response, as defined by the first assessment with > 50% decrease in MADRS. ▪ The rate of early and sustained full responders. ▪ Rate of remission, as defined as a MADRS score < 12.

Inclusion and exclusion criteria required patients to be in the midst of a major depressive episode of sufficient intensity (MADRS > 30) for at least 8 weeks, have a history of at least one other major depressive episode, not be at high risk of suicide or violence, and not suffering from a number of other comorbidities such as personality disorders, bipolar disorder, or psychosis.

Trial Results. In this study, MIN-117 appeared to cause a dose-dependent decrease in mean MADRS score that increased with longer durations of therapy. The results are shown in Figure 38. The effect sizes at 6 weeks compared to placebo in the 0.5 mg and 2.5 mg groups were 0.24 and 0.34, respectively.100 Studies have shown that effect sizes of roughly 0.3 are typical for antidepressants, indicating that MIN-117 has a similar mean treatment response as other drugs on the market.101 In addition, 24% of patients treated with 2.5 mg of MIN-117 achieved remission in the study as prospectively defined in the protocol. Subjects treated with MIN-117 did not experience sleep disruptions. These subjects had normal sleep architecture, continuity, and duration, suggesting that MIN-117 may not affect patient’s sleep unlike many antidepressants on the market. Paroxetine treatment also showed a treatment effect compared to placebo, confirming the sensitivity of the assay.

Figure 38. MADRS Change from Baseline Following Treatment with MIN-117, Paroxetine, or Placebo

Source: Davidson et al., 2016

100 M. Davidson, et al., 2016. MIN-117: A Randomized, Double-Blind, Parallel-Group, Placebo- and Active-Controlled Study to Evaluate Efficacy and Safety in Patients with Major Depressive Disorder. American College of Neuropsychopharmacology 2016. 101 Khan, A and Brown, WA., 2015. Antidepressants versus placebo in major depression: an overview. World Psychiatry, 14, pp294-300.

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The 2.5 mg dose cohort had an odds ratio of achieving remission of 3.1 at 6 weeks relative to placebo, compared with a 1.1 odds ratio in the paroxetine-treated group. Subjects treated with MIN-117 also showed a more rapid response than paroxetine-treated subjects, defined as a 50% reduction in MADRS score. The cohort receiving 2.5 mg of MIN- 117 reached an odds ratio for a response of 2.7 at 2 weeks, compared with 1.2 for the paroxetine group. These results suggest that treatment with MIN-117 could be used to rapidly and meaningfully reduce symptoms of depression and potentially even result in remission for a subset of patients.

MIN-117 was well tolerated in the study. Measures of cognition, sexual dysfunction, and weight gain were not statistically different than those observed in the placebo group, and no serious adverse events (SAE) were reported. MIN-117 appeared to preserve normal sleep architecture and measures of sleep quality, which could be an important point of differentiation compared to paroxetine and other antidepressants, which are known to adversely affect sleep.

Competitive Landscape for MDD

Room for Improvement on Treatment Efficacy. With existing antidepressant therapies, roughly 60-70% of MDD patients do not achieve remission and 30-40% of patients do not experience a meaningful response.102 In addition, there is a considerable delay between initiating treatment and the time to reach a clinical response. Current guidelines suggest waiting at least 4-6 weeks before switching to a new antidepressant, risking clinical worsening and premature discontinuation of therapy.103,104 New drugs for MDD that can improve upon the efficacy of existing antidepressants, either through higher response and remission rates or faster time to clinical response, could capture meaningful market share, especially in light of the side effects common to many of the marketed antidepressants.

Antidepressant Side Effects Greatly Diminishes Compliance. Side effects are one of the most commonly cited reasons for patients stopping antidepressant therapy. The side effects most troubling to MDD patients on long-term therapy are the insomnia, weight gain, and sexual dysfunction.105 Novel therapies with an improved side effect profile could capture a meaningful share of the antidepressant market.

MIN-301: Recombinant Neuregulin-1β1 to Slow Progression of Parkinson’s Disease

Minerva’s MIN-301 is a recombinant form of the neuregulin-1β1 peptide that the Company is developing as a potential treatment for Parkinson’s disease (PD). Minerva is currently conducting preclinical studies in order to support an IND filing for MIN-301. Preclinical investigation suggests that neuregulin-1β1 is involved in modulating dopamine levels

102 Moncrieff, J and Kirsch, I, 2005. Efficacy of antidepressants in adults. British Medical Journal, 331, pp551–557 103 Kato, M and Serretti, A, 2010. Review and meta-analysis of antidepressant pharmacogenetic findings in major depressive disorder. Molecular Psychiatry, 15(5), pp473-500. 104 Masand, PS., 2003. Tolerability and adherence issues in antidepressant therapy. Clinical Therapeutics, 25, pp2289-2304. 105 Ferguson, JM, 2001. SSRI Antidepressant Medications: Adverse Effects and Tolerability. Primary Care Companion to the Journal of Clinical Psychiatry, 3(1), pp22-27.

Page 50 April 19, 2017 and has neuroprotective effects in a PD mouse model.106,107 In addition, MIN-301 readily crossed the blood-brain barrier (BBB), which has been a challenge with other molecules in this drug class. Minerva hopes to show that MIN- 301 has the potential to slow or even reverse the motor and cognitive impairments associated with PD progression as opposed to existing therapies which merely treat symptoms of the disease as they manifest. The Company has full worldwide rights to MIN-301.

Neuregulins are a large family of differentiating factors in involved in neural development. Neuregulin-1 has been shown to modulate cerebral dopamine pathways through its receptor kinase ErbB4, which is expressed in dopaminergic neurons.108,109 Systemic administration of cleaved neuregulin-1β1 reduces dopaminergic loss in two distinct mouse models of PD.110 Importantly, the investigators confirmed that neuregulin-1β1 does not alter the toxic challenge to which dopaminergic neurons are exposed. These results point to a positive effect on the survival of dopaminergic neurons, which has the potential the later the progression of the disease.

Intellectual Property & Licensing

MIN-101. Minerva signed an exclusive licensing agreement with Mitsubishi Tanabe Pharma Corporation (MTPC) in 2007 covering worldwide rights for MIN-101 (originally named CYR-101) excluding certain Asian countries like China, Japan, India, and South Korea. The Company is obligated to make milestone payments totaling up to $47.5 million following a launch in the US and EU as well as high single digit to low teen royalties on net sales. The terms of the deal were renegotiated in January 2014 and now take into account the possibility of Minerva selling rights to the license. In this event, Minerva will pay low double-digit royalties on milestone payments as well as received royalties.

MIN-202/JNJ-42847922. Minerva has a patent portfolio for MIN-202 that it licensed from Janssen Pharmaceuticals (NYSE: JNJ). These patents cover composition of matter for a variety of orexin receptor modulators as well as use for treating diseases mediated by orexin receptors. This intellectual property protection is thought to extend until at least October 2030. In February 2014, Minerva entered into a co-development agreement with Janssen. Minerva has retained rights to MIN-202 in the European Union, Switzerland, Liechtenstein, Iceland, and Norway, and is entitled to high single digit royalties on all sales by Janssen.

MIN-117. Sonkei acquired worldwide rights to MIN-117 from MTPC in 2008, excluding China, Japan, India, and South Korea. The Company is obligated to make milestone payments totaling up to $47.5 million following a launch in the US and EU as well as high single digit to low teen royalties on net sales. Minerva acquired this intellectual property when Cyrenaic and Sonkei merged. Minerva has holds exclusive licenses to patents that protect the

106 Deboylu, C, et al., 2015. Systemically administered neuregulin-1β1 rescues nigral dopaminergic neurons via the ErbB4 receptor tyrosine kinase in MPTP mouse models of Parkinson's disease. Journal of Neurochemistry, 133(4), pp590-7. 107 Carlsson, T, et al., 2011. Systemic administration of neuregulin-1β1 protects dopaminergic neurons in a mouse model of Parkinson’s disease. Journal of Neurochemistry, 117(6), pp1066-1074. 108 Rosler, T, et al., 2011. Biodistribution and brain permeability of the extracellular domain of neuregulin-1β1. Neuropharmacology, 61(8), pp1413-1418. 109 Mei L, Xiong W, et al. Neuregulin 1 in neural development, synaptic plasticity and schizophrenia. Nature Reviews Neuroscience, 9(6), pp437-52. 110 Deboylu, C, et al., 2015. Systemically administered neuregulin-1β1 rescues nigral dopaminergic neurons via the ErbB4 receptor tyrosine kinase in MPTP mouse models of Parkinson's disease. Journal of Neurochemistry, 133(4), pp590-7.

Page 51 April 19, 2017 composition of matter and method of use for MIN-117 in treating depression. The terms of the deal were renegotiated in January 2014 and now take into account the possibility of Minerva selling rights to the license. In this event, Minerva will pay low double-digit royalties on milestone payments as well as received royalties.

MIN-301. Minerva acquired full rights to MIN-301 through its acquisition of Mind-NRG in 2014. MIN-301 is protected by 4 families of patents and patent applications, which currently provide protection until at least 2022. This expiration date may be extended to 2028 if additional patents are granted.

Management Team

Dr. Remy Luthringer President and Chief Executive Officer

Dr. Remy Luthringer is the President and Chief Executive Officer of Minerva Neurosciences, Inc. He has been involved in the development of more than 150 active molecules for clinical trials in the central nervous system. Dr. Luthringer is an Advisor at Medicxi Ventures, formerly Index Ventures, a venture capital firm comprising all of the life sciences portfolio companies, funds and team from Index Ventures. Previously, he served as Chief Medical Officer for Index Ventures, with a focus on investments in healthcare infrastructure. He was also the head of the FORENAP Institute for Research in Neurosciences and Neuropsychiatry in France. Dr. Luthringer has extensive experience in clinical psychiatric practice and holds a PhD in neurosciences and clinical pharmacology.

Geoff Race Executive Vice President, Chief Financial Officer and Chief Business Officer

Prior to being named as Minerva Neurosciences’ CFO, Mr. Race served as a consultant for the development of MIN- 101 and MIN-117. He has previously served as Chief Executive Officer of Funxional Therapeutics Ltd., the lead program of which (FX125L) was acquired by Boehringer Ingelheim in 2012. He also served as Chief Financial Officer at PanGenetics B.V. He is a Fellow of the Chartered Institute of Management Accountants and earned his MBA from Durham University Business School.

Dr. Michael Davidson Chief Medical Officer

Dr. Davidson has extensive experience in the research and development of drugs to treat diseases of the central nervous system. He has been a consultant for a number of pharmaceutical and biotechnology companies, and is a board member and reviewer for several professional organizations and neuroscience and psychiatry publications. Dr. Davidson has received the Neuroscience Award from the European College of Neuropsychopharmacology and from the International College of Neuropsychopharmacology. He is the recipient of over 50 research grants and has published over 300 articles primarily in peer reviewed journals in the areas of schizophrenia and Alzheimer’s disease.

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Joseph Reilly Senior Vice President and Chief Operating Officer

Joe Reilly was most recently Vice President, Head of Commercial Strategy and Operations at Genzyme Corporation. In more than a decade at Genzyme, he also served as Vice President of Global Business Operations, Vice President of Commercial Operations and Vice President of Finance in the Rare Diseases Division. Joe holds a BS and MS in Finance from Boston College.

Fred Ahlholm Senior Vice President, General Counsel and Secretary

Fred Ahlholm was most recently Vice President of Finance and Chief Accounting Officer for Amarin Corporation plc, where he helped direct the growth of the company from a small clinical-stage drug developer into a commercial enterprise of more than 400 employees. Fred is a CPA and earned his BBA at the University of Notre Dame.

Mark Levine Senior Vice President, General Counsel and Secretary

Mark Levine has extensive experience counseling companies on general corporate matters, complex commercial transactions, mergers and acquisitions, securities law, corporate governance and regulatory compliance. Prior to joining Minerva Neurosciences in 2014, he served in senior legal positions at athenahealth, Inc., Clinical Data, Inc., Wheelabrator Technologies Inc., and Xpedior Incorporated. He holds a bachelor of arts degree from Binghamton University, SUNY, and a juris doctor degree from Washington University School of Law in St. Louis.

Risk to an Investment

We consider an investment in Minerva Neurosciences to be a high-risk investment. Minerva has generated limited clinical data to date, and early signs of safety and efficacy may not necessarily translate into late-stage success. There are clinical and commercialization risks associated with their program as well. As with any company, Minerva may be unable to obtain sufficient capital to fund planned development programs. There are regulatory risks associated with the development of any drug, and Minerva may not receive FDA or EMA approval for its drug candidates despite significant time and financial investments. Regulatory approval to market and sell a drug does not guarantee that the drug will penetrate the market, and sales may not meet expectations.

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Analyst Certification The research analyst denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies), with respect to each security or subject company that the research analyst covers in this research, that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or subject companies, and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.

DISCLOSURES This research contains the views, opinions and recommendations of LifeSci Capital, LLC (“LSC”) research analysts. LSC (or an affiliate) has received compensation from the subject company for producing this research report. Additionally, LSC expects to receive or intends to seek compensation for investment banking services from the subject company in the next three months. LSC (or an affiliate) has also provided non-investment banking securities-related services, non-securities services, and other products or services other than investment banking services to the subject company and received compensation for such services within the past 12 months. LSC does not make a market in the securities of the subject company.

Neither the research analyst(s), a member of the research analyst’s household, nor any individual directly involved in the preparation of this report, has a financial interest in the securities of the subject company. Neither LSC nor any of its affiliates beneficially own 1% or more of any class of common equity securities of the subject company.

LSC is a member of FINRA and SIPC. Information has been obtained from sources believed to be reliable but LSC or its affiliates (LifeSci Advisors, LLC) do not warrant its completeness or accuracy except with respect to any disclosures relative to LSC and/or its affiliates and the analyst's involvement with the company that is the subject of the research. Any pricing is as of the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute LSC’s judgment as of the date of this report and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, companies, financial instruments or strategies to particular clients. The recipient of this report must make his/her/its own independent decisions regarding any securities or financial instruments mentioned herein. Periodic updates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other publicly available information. Additional information is available upon request.

No part of this report may be reproduced in any form without the express written permission of LSC. Copyright 2017.

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