Juan Sanchez - VP, Corporate Communications and IR Sharon Mates - Chairman and CEO Kimberly Vanover - SVP of Clinical Development Larry Hineline - CFO Cedric O'Gorman - VP of Medical Affairs Michael Halstead - SVP and General Counsel.

Leyi Wang - Leerink Partners Adnan Butt - RBC Capital Markets Bert Hazlett - Ladenburg Bill Tanner - Guggenheim Securities Ritu Baral - Cowen.

Good morning, ladies and gentlemen and welcome to the Intra-Cellular Therapies' Year End 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session, and instructions will be given at that time.

[Operator Instructions] As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to your host, Dr. Juan Sanchez, Vice President, Corporate Communications and Investor Relations. Please go ahead..

Thank you, operator. Good morning and thank you all for joining us for today's conference call. Our earnings press release, providing a corporate update and details of the company's financial results for the fourth quarter and full year ended December 31, 2015, crossed the wire a short time ago.

A press release is available on our Web site at www.intracellulartherapies.com. Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Dr. Kimberly Vanover, Senior Vice President of Clinical Development; Larry Hineline, Chief Financial Officer; Dr.

Cedric O'Gorman, Vice President for Medical Affairs; and Michael Halstead, Senior Vice President and General Counsel. As a reminder, during today's call, we will be making certain forward-looking statements.

These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of the company's product candidates, the anticipated conduct and results of future clinical trials, plans regarding regulatory filings, future research and development and possible uses of existing cash and investment resources.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risk and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements. I will now turn the call over to Sharon..

Thanks, Juan. Good morning everyone, and thank you for joining us for today's conference call. We are here today to provide an overview of our progress during 2015, and describe highlights of our plans for 2016.

I will begin with a summary of our accomplishments for 2015, and will describe the progress we have made recently with our lead program, ITI-007, and with other programs in our pipeline.

Kim will then review our ITI-007 Phase 3 programs in both schizophrenia and bipolar depression, as well as our plans for the development of ITI-007 for behavioral disturbances in patients with dementia, including Alzheimer's disease. Lastly, Larry will review our financial results, and we will then open the line for Q&A. 2015 was an exciting year.

We made great progress in our clinical programs, expanded our infrastructure, and strengthened our financial position. We announced positive results from our first Phase 3 study of ITI-007 in patients with schizophrenia, and also announced the results of a Positron Emission Tomography or PET study in patients with schizophrenia.

Taken together, these studies demonstrate the anti-psychotic efficacy of ITI-007, and its safety and tolerability profile, as well as its differentiated pharmacology. During the year, we initiated our second Phase 3 study in patients with schizophrenia.

This study is progressing well, and as stated in our press release this morning, we expect patient enrollment will be completed in the second quarter of this year. We also initiated our Phase 3 bipolar depression program.

Our bipolar depression program consists of two Phase 3 clinical trials, and will include patients with bipolar I, and patients with bipolar II disorder. One trial will evaluate ITI-007 as a monotherapy and the other trial will evaluate ITI-007 as an adjunctive therapy with either lithium or valproate.

Importantly, ITI-007 has not only shown efficacy and pro-social benefits in our schizophrenia studies to-date, but has also been well-tolerated by patients, as highlighted by our study completion rates. Clinical studies to-date have shown that ITI-007 has a motoric, metabolic, and cardiovascular profile similar to placebo.

With this profile, we believe ITI-007 may represent an effective treatment for many patients across multiple indications. Better tolerability can lead to improved medication adherence allowing patients to achieve the long-term benefits of staying on treatment.

We believe that patients, caregivers, clinicians, and payers alike would recognize and appreciate such an advance in treatment. While the majority of patients with schizophrenia receive oral treatment, some patients with schizophrenia may benefit from an alternate formulation such as a long-acting injectable.

The use of existing anti-psychotic long-acting injectable formulation is limited in part due to the side effects associated with these medications. We believe that ITI-007 with its favorable safety and tolerability profile is an ideal candidate for the development of a long-acting injectable formulation.

To this end, we are in preclinical development with this program.

In addition to schizophrenia and bipolar depression, we are excited by our continued progress in the development of ITI-007 for the treatment of additional neuropsychiatric and neurological indications, including the treatment of behavioral disturbances in patients with dementia including Alzheimer's disease.

We continue to advance our innovative phosphodiesterase or PDE platform. The lead compound in the PDE portfolio, ITI-214, is the first selective PDE type 1 inhibitor to be studied humans.

In four Phase 1 clinical trials, ITI-214 was found to be safe and generally well tolerated in both healthy volunteers and patients with schizophrenia across a broad range of doses.

We are currently evaluating the development strategy for ITI-214 for several indications including cognition in patients with Parkinson's disease, dementia, schizophrenia, and other CNS and non-CNS disorders. We will provide an update on the next step to this program later this year.

Moving to our financials, in 2015, we strengthened our balance sheet through two public offerings and ended the year with 475.2 million in cash, placing us in a very strong financial position to advance our various development programs. Shortly, Larry will discuss our financials.

I would now like to turn the call over to Kim who will review our clinical programs in greater detail..

Thanks, Sharon. Following the announcement of the positive results from our first Phase 2 trial of ITI-007 in patients with schizophrenia, we have made further progress in our ongoing clinical program including our second ITI-007 Phase 3 study in schizophrenia and our Phase 3 bipolar depression program.

Furthermore, we are advancing our program for the treatment of behavioral disturbances in patients with dementia. The second schizophrenia Phase 3 trial or 302 trial is evaluating the efficacy and safety of ITI-007 60 mg and 20 mg compared to placebo over six weeks of once daily oral treatment with Risperidone as an active control.

The primary endpoint is changed from baseline versus placebo at six weeks on the positive and negative syndrome scale or PANS total score. Our 302 trial is progressing well. And as Sharon mentioned, we expect patient enrollment will be completed in the second quarter of this year and we will provide an update on our clinical activities at that time.

According to the National Institute of Mental Health, over 1% of the world's population suffers from schizophrenia and more than 2.5 million American suffer from the illness in any given year.

There remains a substantial unmet medical need for the treatment of schizophrenia; existing treatments while helpful for the positive symptoms of schizophrenia do not provide broad symptom control across other symptom domains and are limited by significant tolerability issues, including motoric and metabolic side effects.

The clinical profile of ITI-007 today suggest broad efficacy for the treatment of schizophrenia along with pro-social benefit and a highly favorable motoric, metabolic, and cardiovascular side effect profile that does not differ significantly from placebo.

As Sharon mentioned, in the third quarter of 2015, we initiated our Phase 3 bipolar depression program. This program consists of two Phase 3 trials. The 401 trial is designed to evaluate ITI-007 as a monotherapy and the 402 trial is designed to evaluate ITI-007 as an adjunctive therapy with lithium or valproate.

In each trial, we are evaluating patients with a clinical diagnosis of bipolar I or bipolar II disorder, who are experiencing a current major depressive episode. The primary endpoint is changed from baseline versus placebo at six weeks on the Montgomery-Asberg Depression Rating Scale or MADRS total score.

There are few approved therapies for the treatment of bipolar depression. Bipolar disorder affects approximately 5.7 million adults in the U.S., representing a 12-month prevalence of 2.6%, according to the National Institute of Mental Health.

Bipolar depression represents the most common clinical manifestation of bipolar disorder and is associated with a worse prognosis than bipolar mania. We believe ITI-007 has the potential to be broadly indicated for the treatment of depressive episode associated with both bipolar I and II disorders as both a monotherapy and as an adjunctive therapy.

With regard to our low-dose strategy, we believe that ITI-007 has the potential to treat a wide range of behavioral disturbances in patients with dementia including Alzheimer's disease. It has been estimated that 44.4 million people worldwide were living with dementia in 2013, including over 5.2 million patients with Alzheimer's disease in the U.S.

In the addition to the hallmark cognitive deficit, over 50% of patients with dementia also suffer from behavioral disturbances including agitation, heightened aggression, depression, sleep disorders, sundowning, and psychosis, behavioral disturbances which result in significant patient and caregiver distress and lead to early patient institutionalization.

Given the differentiated pharmacologic and favorable tolerability profile of ITI-007, we are encouraged by the potential to address this large unmet medical need, for which there are no currently approved therapies. We will be providing details of this clinical program upon initiation later in the first half of this year.

Before turning the call over to Larry, I would like to announce that we will be presenting our data at a number of upcoming scientific meeting, including the Schizophrenia International Research Society meeting commonly known as SIRS, the Society of Biological Psychiatry meeting or SOBP, and the American Psychiatric Association meeting or Asia Pacific; all occurring in the first half of this year.

In these venues, we will be sharing additional data from our ITI-007 development program. I will now turn the call over to Larry who will review the financial results for the fourth quarter and full year..

Thanks, Kim. I will be reviewing our financial results for both the fourth quarter and year ending December 31, 2015, and provide an overview of our expectations for the use of our cash and investments. The net loss for the fourth quarter of 2015 was $28.8 million compared with a net loss of $15.2 million for the fourth quarter of 2014.

Basic and diluted net loss was $0.67 per share for the fourth quarter of 2015 compared to a basic and diluted net loss of $0.52 per share for the same period in 2014.

For the full year of 2015, the net loss was $104.8 million or $2.91 per share compared with a net loss of $30.7 million or $1.07 per share, basic and diluted, for the same period in 2014.

Research and development expenses for the fourth quarter of 2015 were $22.9 million, and for the full year were $87.7 million compared to $11.6 million for the fourth quarter of 2014 and $21.2 million for the full year of 2014.

The increase year-over-year is primarily due to cost associated with the Phase 3 clinical development program for ITI-007 in schizophrenia, which was initiated in late 2014. General and administrative expenses for the fourth quarter of 2015 were $6.5 million.

And for the full year, were $18.2 million, compared to $3.7 million, and $10.3 million for the prior year periods. The increase is primarily the result of higher stock-based compensation expense, and to a lesser extent, bonus and labor cost, and state and local franchise and capital taxes.

Cash in investments totaled $475.2 million at year end 2015, compared to $129.6 million at year end 2014. We completed two underwritten public offerings of our common stock in March and September of 2015. In March, we issued 5.4 million shares at $24 a share, for a total of $130 million in gross proceeds.

In September, we issued another 7.9 million shares at $43.50 a share for gross proceeds of $345 million. With that, operator, could you please open the line for questions..

Thank you. [Operator Instructions] Our first question is from Seamus Fernandez with Leerink Partners. Your line is open..

Hi, good morning. This is actually Leyi Wang on behalf of Seamus. Thanks for taking the question.

I just want to ask quickly, if the management is still guiding to meet 2016 top line readout for the second Phase 3 study, because I believe, if I'm correct, you took about three months between the patient enrollment completion in the first Phase 3 study to the top line readout.

So if we assume second quarter enrollment completion, then three months after you could well push into the mid-October timeline for the data readout. I just want to see if the guidance has changed on that regard. Thank you..

Thanks Leyi, this is Sharon. And I'll start, and I'll turn it over to Kim as well. We have not changed our guidance. I think that we will give you further guidance when we enroll the last patient, we will announce last patients enrolled. And we are still on our timeline of midyear.

And I think that from the time that we enroll last patients, I'm sure may people on this call have already done the math. The study is a six-week study, so patients will be on treatment for six weeks, and then a two-week follow-up, and then time to clean the data, unlock the database, which keeps us on our timeline.

You want to add anything, Kim? Are you all set?.

No, I think that summarizes it well. Thanks, Sharon..

Great..

Great, thank you..

Thank you. Our next question is from Adnan Butt with RBC Capital Markets. Your line is open..

Thanks. I'll have two here, but first on the bipolar depression program, are there differences in how 007 is being developed versus the program conducted by the other two or three agents approved, perhaps in the number of patients.

Can you point to those differences, please?.

Thanks, Adnan, this is Sharon again. And again I'll start, and ask Kim if she wants to add anything. So there are only a few treatments that have a label for bipolar depression, three, and only two of them are actually used. And those two, they each have slightly different labels.

One is approved as a monotherapy, and that's Seroquel approved as a monotherapy for bipolar I, and bipolar II, but only as a monotherapy. The other is approved only in bipolar I patients, so -- and that's about half the population in each bipolar I and bipolar II.

So the other is approved as both a monotherapy and an adjunctive therapy, but only in bipolar I, and that's Latuda. Our program is addressing both bipolar I patients and bipolar II patients, and both as a monotherapy and as an adjunctive therapy..

And I would just add that we are quite enthusiastic about the profile for ITI-007. We believe this will translate well what we've seen in terms of the safety profile, and the efficacy that we've seen in the schizophrenia program.

That this will translate well to the bipolar patients, and be able to have a broad treatment across the bipolar I and II as both a monotherapy and adjunctive therapy..

Okay, thanks. And then if I can get a pipeline question on the PDE1 program. I think for certain PDEs there is some preclinical data in existence that shows work in cognition. Is there any preclinical data or even clinical data, or anything you saw on the Phase 1 for the PDE1 program? And that's it. Thanks..

So I think -- this is Sharon again. I think on the PDE1 program, you're correct. We have preclinical data that demonstrates an effect in cognition. The Phase 1 data was -- Phase 1 human data was primarily safety. And it was shown that in all four studies it was safe, and generally well-tolerated.

One of those studies had patients - in patients with schizophrenia. In that study there was -- there were hints of improvement in cognition, but really there were too few patients to make a lot of it, other than things went in the right direction..

Okay, thank you..

Your next question is from Bert Hazlett with Ladenburg. Your line is open..

Thank you. I have, I guess, two [indiscernible] questions. One is pretty straightforward on the R&D spend. Larry, maybe this is for you. There was a significant decrease in R&D spend 3Q to 4Q. [Technical difficulty] think about the trajectory of that quarter00-to-quarter throughout 2016? And then secondly, [technical difficulty]..

Bert, are you still there?.

Can you hear me?.

We can now..

Now….

Yes, I think we lost you..

Did you hear my question on R&D spend? Sorry..

I heard that you said there was a decrease from Q3 into Q4..

Yes, so there's a decrease. How do we think about that throughout the year of 2016? We would expect with you to continuing these trials, for it to increase.

But how do we think about the trajectory throughout 2016?.

Well, I would say that the third quarter is probably more reflective of what's going to happen in the first quarter, and moving forwards. We have disclosed before that we are going to be spending somewhere between 130 million and 160 million in the upcoming year. And we have several -- three trials or so, or more, going on at the same time.

And so the timing of those trials will dictate what quarters those expenses fall in. But certainly, I think the third quarter is more representative of what's going to happen. And then that will be ramping up a little bit as we go further..

Okay, thank you for that. And then in terms of the bipolar studies, just thinking back to the schizophrenia -- the conduct of the schizophrenia studies, there have been some, let's call them, improvements in trial design using centralized graders and other things that have been employed in the schizophrenia studies.

Are there similar types of improvements that you have been able to employ with the bipolar I -- with the bipolar studies? And if so, would you be able to elaborate on those? Thanks..

I'm going to ask Kim to address that question..

Thanks, Sharon. Yes, I think that's a really good question. And we do take a similar approach, as we have in our schizophrenia program, and apply some of those learnings to our bipolar program. It's not exactly the same. It's a different patient population.

I mean we've made adjustments for that, but we believe we have a strong clinical design for our bipolar program..

And could you comment on the timing of those studies.

Any sense of when they should read out?.

So what we've said is towards the end of 2017..

Okay, thank you very much..

Our next question is from Bill Tanner with Guggenheim Securities. Your line is open..

Thanks for taking the question. Sharon or Kim, on 007 for behavioral disturbances in dementia, can you just remind us of the pharmacology -- the pharmacologic rationale for that.

And secondly, on the ability to use concomitantly with donepezil or memantine? And then finally, is there a utility or is there a market opportunity to look at other behavioral disturbances other than in dementia? Thank you..

Sharon, do you want to start or….

No. Why don't you -- I'm going to ask Kim to go ahead and start. I was trying to scribble down all your questions [technical difficulty] I got them all….

Sorry..

But maybe she got some more of them than I did. Okay..

Well, so I'll start with addressing our low-dose strategy for behavioral disturbances in dementia. And we're really enthusiastic about this.

You may remember that we had conducted a Phase 2 study in patients with primary insomnia, where we showed the low-dose range improved sleep maintenance in patients with primary insomnia, with no cognitive impairment the next day. And we thought that was important in defining the low-dose strategy of moving forward.

Then we conducted a safety study in -- first in healthy geriatric subjects, and then a cohort in patients with dementia to show that the range of doses was safe, and well-tolerated in that study. So the -- really, we're taking these low doses that have strong 5-HT2A antagonism, and important amount of dopamine modulation.

So we're in the range of full 5-HT2A occupancy in the cortex, and about 10% striatal D2 occupancy.

And then that efficient dopamine modulation that we're seeing with ITI-007, we think will contribute to improvement in a variety of behavioral disturbances, including a reduction in the agitation and aggression, improvement of mood, improvement of sleep. And that will really benefit these patients with the favorable safety profile that we've seen..

And that little bit of D1 as well, which we think is very important..

That's right, the D1 glutamatergic effects and the serotonin transporter inhibition that come along with the efficient dopamine modulation..

Got it.

So it's not just 5-HT2A mediated?.

No..

That's exactly right..

In fact, with maintenance insomnia study we showed -- we tested one, five, and 10 milligrams. And one milligram, which is presumably primarily, if not exclusively 5-HT2A, we had improvement in their sleep maintenance.

And then five was a little better than one, and then we showed that at 10 milligrams, where we have about 10% D2 receptor occupancy, as well as the other receptor pharmacology which closely follows the D2 occupancy. That, in fact, we had a much greater magnitude of effect in that patient population. And we think that translates.

And if you look at the off-label use in patients with dementia, these antipsychotics, it's what they're trying to achieve, but they can't. They're trying to achieve the 5-HT2A occupancy, which we do believe is important. And then have just a little bit of the, in their case, D2.

But they can't achieve that because they either get D2 occupancy first, or equal D2 5-HT2A. And then they also have these off-target receptors' occupancies, such as H1, and other pharmacology that contributes to cardiovascular effects as well..

Okay..

And we don't have -- we don't hit those receptors..

So then on the question of the ability to co-administer with Donepezil or Memantine, do we know anything about that?.

Yes, we do. But when we put the clinical studies on clinical trials, that will give you the design….

Got it..

And I think it's a little too early to do that..

And utility for other behavioral disturbances outside of dementia?.

Yes, we think there is utility. There is utility in patients with autism is a very great example and other neuropsychiatric and neurodegenerative diseases as well..

Okay, all right, thanks very much..

Our last question is from Ritu Baral with Cowen. Your line is open..

Hi, guys, thanks for taking the question.

What are you about now in terms of what you will top line from the 302 study? And what are your expectations around the Risperidone arm, especially in relation to the 20 mg arm which is -- which I don't think you have tested before at all?.

Okay. Thanks, Ritu..

So, hi, Ritu. This is Kim. Thanks for the question. So, for the top line data in 302, I think I would anticipate for us to be able to show a similar datas what we showed in the 301 program. We have the same primary efficacy endpoint, the PANS total score. And the safety profile we'll provide highlights there as well..

Would you show that just in comparison to placebo? Would you be able to provide those measures in comparison to Risperidone on the top line?.

No. These tests are designed to test both ITI-007 against placebo and Risperidone against placebo. That is -- the use of Risperidone in the Arm is just as an active control. I think it is not to do any non-inferiority or superiority testing at all for efficacy..

Right.

Would report how Risperidone does at the time of top line data?.

Yes..

Okay. Got it..

Got it. Okay..

Fair enough, just making sure. And then, the 20 mg, Kim. Thanks..

Yes, so as I think we said in the past that we have a strong pre-clinical data that predict antipsychotic efficacy of what is the equivalent of the 20 mg dose. So, we believe this is important for us evaluate. And so, we've included this dose in our Phase 3 program..

Importantly though, as we have said before as well, that I think everyone understands that both from the Phase 2 study that we did and the first Phase 3 study and the study that's ongoing, there is no titration needed for the 60 mg dose.

So, unlike many if not all of the other anti-psychotic where you need to titrate your dose up, here we have an effective dose that is active very early and that no titration is needed. So, we think that that is really the important message here..

Got it.

And one quick follow-up, just because we are getting close to your final schizophrenia dataset, how are you looking at potential commercial planning, hiring, and spending over the next four to six quarters?.

Right. So, we don't -- we haven't given you six quarter guidance. We have said as Larry mentioned that we have given you guidance that we expect in 2016 to spend between 130 and 160 million. And so, I would use those numbers. We do believe that we can launch this product on our own.

And to that end, we have and I think some of you have heard from him, we did hire a vice president of commercial development. And so, we are in the midst of our planning right now..

Is more sort of senior commercial hires in the works for the next four quarters or so?.

I think we will give you further guidance on that as we go along as to the exact nature of people. I think what we are -- I can tell you what we are not doing, and that we are not hiring a sales force yet. And we also I think, yes, we are growing our infrastructure.

And I think that we are hiring the appropriate people to grow our infrastructure in order to be able to launch our product..

Got it. Thanks for taking the questions..

Thank you. I am not showing any further questions. I'll now turn the call back to Sharon Mates for closing remarks. Please proceed..

Great. Thank you, operator, and thank you all for joining the call. In summary, we've made great progress in 2015. We continue to generate data for ITI-007 in schizophrenia. And we feel confident that the clinical benefit of ITI-007 may be observed across several indications.

Patients, who suffer from neuropsychiatric and neurodegenerative disorders, continue to be underserved by existing medications. And we remain committed to developing innovative treatment that can provide broad efficacy without many of the safety and tolerability issues associated with current therapies.

We believe that with effective treatments that can be better tolerated, patients will be more likely to stay on their medications. With this it will become better long-term clinical outcome, improved life for patients and their caregivers, and reductions in overall societal burden and healthcare cost.

We look forward to speaking to you again soon and reporting on the progress of our program. Operator, you may now disconnect the call..

Ladies and gentlemen, this does conclude the program. You may all disconnect. Everyone have a great day..