Juan Sanchez – Vice President, Corporate Communications and Investor Relations Sharon Mates – Chairman and Chief Executive Officer Kimberly Vanover – Senior Vice President-Clinical Development Larry Hineline – Vice President and Chief Financial Officer.

Bill Tanner – Cantor Fitzgerald Paul Matteis – Leerink Partners Charles Duncan – Piper Jaffray Bob Hazlett – BTIG Edward Nash – SunTrust.

Good morning, ladies and gentlemen, and welcome to Intra-Cellular Therapies' Third Quarter 2017 Financial Results Conference Call. As a reminder, today's conference call is being recorded. We will have a question-and-answer session later and the instructions will be given at that time.

[Operator Instructions] I will 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 quarter ended September 30, 2017, crossed the wire a short time ago and it’s available on our website at 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, Vice President and Chief Financial Officer, and Mr. 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 development candidate, our clinical and non-clinical plans, our plans to present or report additional data, the anticipated conduct and the source 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 and are subject to change and involve a number of risks 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 obligations to update such statements. I will now turn the call over to Sharon..

a monotherapy study conducted in the United States, an adjunctive study conducted in the United States and a global monotherapy study. We anticipate completing patient enrollment in these studies in 2018.

Bipolar disorder affects approximately 2.6% or 5.7 million adults in the United States, there are few approved therapies for the treatment of bipolar depression and they have clinically relevant limitation in terms of safety and tolerability.

We believe the safety profile of lumateperone seen to-date will translate favorably to people living with bipolar depression. Additionally, we are planning to broaden our program to evaluate lumateperone from the treatment of depressive disorders including major depressive disorder and treatment-resistant depression.

We will provide further updates, as this exciting expansion of lumateperone program progresses and as we enter the clinic for those indications in the next year.

Moving to our dementia program, our lumateperone Phase 3 development program for the treatment of agitation and patients with dementia, including Alzheimer’s disease is ongoing; agitation is highly prevalent and observed in over half of patients with Alzheimer’s disease and represents a leading cause for institutionalization.

There are no approved treatments for agitation and aggression in this patient population. Currently, certain medications are prescribed off-label to manage these behavioral symptoms. These medications are frequently ineffective and associated with deleterious side effects including those leading to falls and fractures and increased mortality.

We believe that low dose lumateperone, which provides complete saturation of the 5-HT2A receptor and also provides modest but necessary D2 receptor blockade for the control of aggressive behaviors is uniquely positioned to address this unmet need with a favorable safety and tolerability profile and provide relief of a broad array of behavioral symptoms associated with dementia.

Our goal is to reduce the significant and costly burden on patients, care givers and families by delaying or preventing nursing home placements. I’d now like to turn to our PDE1 platform, ITI-214 is a potent and selective phosphodiesterase 1 or PDE1 inhibitor and our clinical lead in our PDE program.

The mechanism of action of PDE1 inhibitors suggests therapeutic potential across a variety of CNS and non-CNS diseases. In preclinical study, we have recently demonstrated the importance of ITI-214 and inhibition of PDE1 in reducing neuroinflammation and in regulating microglia function, the primary immune cells on the CNS.

We will be presenting additional data on the mechanism of ITI-214 in neuroinflammation at the Society for Neuroscience meeting next week.

These data suggest that ITI-214 and inhibition of PDE1 may have utility in treating this symptoms and modifying the disease progression in neurodegenerative diseases including Parkinson’s disease, Alzheimer’s disease and other diseases having a strong neuroinflammatory components.

Preclinical models of Parkinson’s disease suggest that our PDE1 inhibitors allow for motor symptom control at lower doses of dopamine replacement therapy while inhibiting adverse dyskinesia induced by these treatments.

Additional models have shown the potential for our PDE1 inhibitors to address non-motor symptoms prevalent in Parkinson’s disease such as reduction in excessive daytime sleepiness, improvement in cognitive function as well as attenuation of other non-motor symptoms.

Based on these preclinical results, and our Phase 1 clinical data demonstrating safety in over 150 normal healthy volunteers and patients with schizophrenia, we have recently initiated a Phase 1/2 randomized, double-blind, placebo-controlled, multiple rising dose clinical trial to evaluate 214 in patients with Parkinson’s disease.

In this trial, patients with mild-to-moderate Parkinson’s disease who are maintained on stable Parkinson’s disease therapy receive ITI-214 oral doses once-daily for seven days. The primary objective of this study is to evaluate the safety and tolerability of ITI-214.

Secondary objectives are to evaluate the pharmacokinetic profile of ITI-214 and to explore its potential utility to control motor symptoms and non-motor symptoms associated with Parkinson’s disease. Plasma levels of inflammatory mediators will be assessed as potential biomarkers of neuroinflammation.

We expect to complete enrollment in this trial by mid-2018. Future efficacy studies may examine non-motor symptoms including depression, psychosis, sleep disturbances, dysautonomia and cognition. Parkinson’s disease affects nearly 1 million people in U.S. and 1.2 million people in Europe.

It is a progressive neurodegenerative disorder largely affecting dopamine neurons in the brain and impairing motor and non-motor function. Current dopamine replacement therapies primarily focused on addressing motor symptoms.

However, over time the doses of these therapies need to be increased to maintain motor control and following long-term treatment patients commonly develop dyskinesia. Additionally, non-motor symptoms are highly prevalent in Parkinson’s disease.

For example, excessive daytime sleepiness affect up to 50% of patients and dysautonomia affects up to 80% of patients. These non-motor symptoms represent an important cause of patient disability and caregiver distress. These symptoms are often under recognized and under treated partially due to the limited therapeutic options available.

We are encouraged about the possibility of ITI-214 to address both motor and non-motor symptoms of this disease. Importantly, currently available treatments for Parkinson’s disease do not modify disease progression. It is critical therefore to develop therapeutic approaches focused on neuroprotective interventions.

Together with valuating the effects of PDE1 inhibition on clinical symptoms associated with Parkinson’s disease, we are valuating the potential disease modifying clinical benefits through reduction of neuroinflammation. Shifting to other programs, we continue the preclinical development of our novel development candidate ITI-333 or triple threat.

Triple three is designed as a potential treatment for substance use disorders, pain and psychiatric comorbidities, including depression and anxiety. As we’re now very aware United States is faced with an unparalleled substance abuse crisis which resulted in more than 560,000 deaths between 1999 and 2015 in U.S. and over 60,000 deaths in 2016 in U.S.

There is a pressing need to develop new drugs to treat opioid addiction and safe, effective and non-addictive treatments to manage pain. We believe the potential exists for ITI-333 to address these challenges.

In preclinical studies, ITI-333 functions as a partial agonist at new opiate receptors, attenuating the behavioral effects of morphine while displaying all analgesic efficacy that is reversible by the new opiate antagonist Naloxone. ITI-333 also acts as a 5-HT2A antagonist with interaction at D1 receptors.

Preclinical safety studies are currently ongoing. It’s successfully translated to humans. This unique pharmacologic profile may yield clinical utility with the treatment of substance use disorder and pain.

Finally, we ended the quarter with $328.1 million in cash and investments which coupled with $162 million in net proceeds from our recent financing, places us in a very strong position to advance our corporate activity. I will now turn the call over to Larry, who will review the financial results for the third quarter..

Thanks, Sharon. I will be reviewing our financial results for the third quarter ending September 30, 2017, including the recent offering of our common stock that raised $172 million with net proceeds of $162 million, and provide an overview of our expectations for the use of our cash and investments.

The net loss for the third quarter of 2017 was $22.9 million, compared with a net loss of $30.3 million for the third quarter of 2016. Basic and diluted net loss was $0.53 per share for the third quarter of 2017, compared to a basic and diluted net loss of $0.77 per share for the same period in 2016.

Research and development expenses for the third quarter of 2017 were $18.5 million compared to $23.9 million for the third quarter of 2016. The decrease for the third quarter of 2017 is primarily due to lower costs associated with outside clinical and non-clinical activities.

In the third quarter of 2016, outside costs were incurred primarily for the second Phase 3 clinical trial of lumateperone in patients with schizophrenia, which was completed in 2016.

In the third quarter of 2017, outside costs were incurred primarily for the Phase 3 clinical trials of lumateperone in patients with bipolar depression and dementia and other lumateperone related trials. General and administrative expenses for the third quarter of 2017 were $5.3 million, compared to $6.3 million for the prior year period.

The decrease is primarily the result of decreased stock option expense and legal fees incurred in the third quarter of 2016 for costs relating to the license of certain intellectual property by us to our wholly-owned subsidiary ITI Limited.

Cash, cash equivalents and investment securities totaled $328.1 million at September 30, 2017, compared to $384.1 million at December 31, 2016. In October 2017, we raised gross proceeds of approximately $172.5 million with net proceeds of $162 million in a public offering of our common stock.

We expect that our cash, cash equivalents and investment securities will be used primarily to advance the lumateperone development programs, to fund pre-commercial activities for lumateperone for the treatment of schizophrenia and bipolar disorder and, if lumateperone receives regulatory approval, initial commercialization efforts; to fund pre-commercial activities for lumateperone for the treatment of behavioral disturbances in patients with dementia, including Alzheimer’s disease; to fund pre-clinical and clinical development of the company’s ITI-007 long-acting injectable program; and to fund lumateperone related manufacturing activities.

Funds will also be used for other clinical and pre-clinical programs, including the company’s phosphodiesterase, PDE development activities.

With that, operator, could you please open the line for questions?.

Thank you. [Operator Instructions] And our first question is from the line of Bill Tanner with Cantor Fitzgerald. Your line is open..

Thanks for taking the question. Sharon, I had one on the ITI-214, interesting comments that you made about the impact on microglia cells and inflammation in PD.

So, I guess, is the contemplation that, I mean, if you give the drug and it works quickly, that is anti – that’s an anti-inflammatory, that’s an anti-microglia effect or is there something from a signal transduction perspective that is also involved?.

Hi, Bill, thanks for the question. Yes, we’re very excited about ITI-214 and the potential for disease modifying effect and through the pathway we described on neuroinflammation. And I’m going to turn it over to Kim to talk about your question in a little bit more detail.

Kim?.

Sure. Hi, Bill. So with Parkinson’s disease we are very excited about the ITI-214. We believe with short-term administration will be able to have good motor control and improve the non-motor symptoms associated with Parkinson’s disease.

And then through a decrease in the inflammation pathways, it has a potential disease modifying effect to really have a potential for improvement of the disease to slow the degeneration over time and with longer-term administration.

And so these data are really exciting, our scientists have been doing a tremendous job in looking at the effects in the preclinical models to show decreases in the pro-inflammatory markers, and we’ll be including exploratory biomarkers in our clinical study as well to follow these..

And just thinking about the biology of PDE1, I mean, obviously, isoforms in the PD family some of them you probably don’t mind hitting and some of them you wouldn’t want to.

So, I mean, I guess even if ITI-214 is slightly a PDE1 inhibitor, are there things that inhibiting PDE1 and various other – or various parts of the body might be undesirable? I mean, I’m just trying to understand kind of what’s the therapeutic window here or what are the potential segments?.

Thank you so much for asking that, Bill.

Kim, do you want to?.

Yes, that’s a really good question. And the exciting thing, ITI-214 is very selective for PDE1 and we know that PDE1 is expressed primarily in the brain, in the heart, and in the microglia.

So it’s really exciting, we’ve done a lot of cardiovascular safety work with ITI-214 and we believe that there’s cardiovascular benefit as well, which also ties into the Parkinson’s disease for the cardiovascular benefit to see if we can improve some of the non-motor symptoms in the cardiovascular system such as the dysautonomia.

So we believe that that we really are taking this three-pronged approach in selective PDE1 inhibitors that are unique feature for PDE1 over other phosphodiesterase..

And it’s very selective. The molecule is very selective for PDE1 over any other PDE..

And Kim, did you mention the cardiac, I mean, I think is it PDE3 that’s an isoform that you might not really want to hit as it relates to cardiac function? So it sounds like in your hands that through the company’s hands PDE1 inhibition in the heart may actually have a beneficial effect..

Correct..

Okay. All right, thanks very much..

Thank you. And our next question comes from the line of Paul Matteis with Leerink Partners. Your line is open..

Great. Thanks so much for taking my questions. I appreciate it. Just first on the NDA submission, Sharon, I was wondering if you could just kind of go through the various components and the current status of where you are regarding generating long-term safety data that’s needed for the submission, CMC, things like that.

And just clarify which are most rate limiting at this point?.

Thanks, Paul. So I’ll just start and then I’ll ask Kim to continue. And we are – as we said, we are on track for submission mid-2018. So I think that our long-term safety is ongoing, and I’ll ask Kim again to comment.

But I think that the important take home here is that we’re on track for that that we will have what we need to have for our submission which we are anticipating being mid-2018.

Kim?.

Sure. And I would just like to that we’ve been very pleased that we’ve been able to enroll rapidly for the long-term safety study. And as Sharon says, we’ll have what we need, and we have a strong CMC package. And so really it’s a matter of putting together all the documentation for the NDA which we’re doing now..

Okay, great. Thanks so much. And then one clinical question, on the broader sort of concept of antipsychotics and the use in – for agitation and behavioral disturbances. Sharon, I was wondering if you could just kind of speaking generally to how you’re thinking about on the dementia behavioral disturbances program has evolved.

In the context – if it has evolved, in the context of one new data we got this year from brexpiprazole and then two, a recent presentation from Acadia where they were they showed their ADP data, they showed actually a higher rate of agitation on their drug versus placebo, and they also discontinued their agitation study.

How does all these kind of decision making new data in the field influence the way you’re thinking about the mechanistic rationale for ITI-007 in that program?.

Well, so this time we’ll reverse the order. I’ll ask Kim to comment first and then I’ll chime in..

That’s a good question. And we really believe that lumateperone has an important feature in that we have full 5-HT2A receptor occupancy in the cortex. And with a little bit of the D2 modulation and the unique feature with lumateperone is that it acts as a presynaptic partial agonist and a postsynaptic antagonist of D2 receptors.

And we believe that little bit of D2 modulation is going to be key for decreasing the agitation and the aggression. And go ahead, Sharon..

And the D1 receptor occupancy as well. But again, I think your comment on the agitation, yes, we do believe that that little bit of D2 is very necessary for the agitation component. So that's that comment. I don't think we're not well versed enough on other people's products to really make comments on them at last the moment.

I think we need to see a little bit more data..

Okay, fair enough. And then just one more question in the bipolar program.

Are you still expecting kind of sequential enrollment of those studies, one in sort of the first half timeframe, and then the other two towards the second half? Is that the right way to think about it?.

Yes, that's correct..

Awesome. Okay, thanks very much..

Thank you. And our next question comes from the of Charles Duncan of Piper Jaffray. Your line is open.

Good morning folks, thanks for taking my question and congratulations on the progress in the quarter. I had a couple of questions some of them related to the ones that were just asked.

But just looking for a little additional color, on the long-term safety study schizophrenia, would you talk about that in a separate press release, when it is completed? Or would you anticipate that the next announcement, the submission of the NDA?.

Talk about forward-looking statements. I think, I'm not sure exactly how to answer that for you. I think that we are preparing the NDA, as you know. I think that it is a little early for me to answer that question.

So as you go forward, unless Kim, do want to say anything more?.

No, that’s fine..

Yeah, okay..

Okay, I guess, what I am really asking is the completion of the long-term safety study dating to the NDA? Or could you submit that information after you file the NDA?.

Maybe I’ll take that Charles. So, I think Sharon doesn't want to speak to what press releases we may put in the future. But from the clinical point of view, certainly, we believe that we have enrolled a sufficient number of patients to meet our long-term safety.

We do continue to allow patients to enroll in the study so to say that we've completed the study and when that will be announced is, we can't anticipate that right now. But certainly, we're on track to have everything that we need for the submission by mid-2018.

And we believe, we'll have everything we’ll need to support the approval of lumateperone for the treatment of schizophrenia. And we will be providing additional data of that long-term safety program as it moves forward..

Okay that’s helpful. Thank you, Kim. And then just hopping over to the question. Previous question on the, I guess, it's a behavioral disturbances associated with dementia or AD, the seems like you folks are very much more focused on agitation, aggression versus psychosis symptoms.

And I'm kind of wondering if you're using those words interchangeably or specifically in that you want to focus on evaluating agitation and the aggression versus the psychosis? And if it's that, why aren't you considering a broader cycle system..

That’s a good question, Charles. But I think agitation, which includes aggression in the clinical definition, is more prevalent.

It occurs earlier than frank psychosis in dementia, and sometimes, the psychosis symptoms can be more transient and perhaps more difficult as you lose more insight, those become difficult symptoms to evaluate from a clinical perspective.

So with agitation and aggression, there's a clear scale that we can use that the experts have developed to really tap into these aggression and agitation behaviors. And we believe that based on the pharmacology with lumateperone, it really is and will be helpful for reducing the agitation and aggression.

I mean, of course, we believe that, what also reduces the psychosis but you really have to focus in on a primary endpoint for these studies..

That makes sense to me. So it is really, it is not the activity, it is really about clinical trials and execution than that..

That is right..

Last question on what actually had one other earlier stage. On long-acting lumateperone, when would you anticipate that to be in the clinic, it looks like an interesting molecule as a follow on..

So we are looking at late 2018, or early 2019 for entering the clinic there..

And for 214, I’m really intrigued with that and its mechanism. Are you considering also potentially the utility of the mechanism and other degenerative diseases such as NF.

Other than, we mentioned today that we are looking at Alzheimer's disease. We are presently evaluating several other diseases, for which, there are neuroinflammatory components, so stay tuned..

Okay, good deal. Thanks for taking my question..

Thank you and our next question comes from the line of Bob Hazlett with BTIG. Your line is open..

So, I think I will continue along the pharmacology discussion today.

I'd just like to, as you contemplate the six week switching study and the breath of that data, in terms of the improvement in PANSS, that you saw in that, I know, we talked about it previously, but to what are you attributing the improvement in PANSS with lumateperone? Is it a compliance issue? Is it because the pharmacology has lower AES, weaker AES, and that's leading to better compliance? Or is it the pharmacology of the molecule in terms of efficacy measures, where something differentiated is going on? And then, could you comment also on the more torque AE's you saw in that study was there any difference there as well?.

So I think this is all really addressed to Kim..

Oh, thanks Sharon. So thanks for the question. In our six-week switching study we did see improvement in the total PANSS switched from standard-of-care antipsychotics in these stable patients and there was a larger improvement in those patients who had greater symptomatology, which we would anticipate.

And we believe this is really driven by the unique pharmacology of lumateperone. Remember that, lumateperone is acting synergistically through serotonin, dopamine and glutamate. And we believe that these other components beyond the D2 modulation may help improve symptoms such as the social function.

We also have seen a very favorable safety profile, and with in respect to your question on the motor AEs that these are very low and similar to the baseline levels and similar to the placebo levels that we've seen in our placebo-controlled trial..

Okay, thank you for that. And then as you mentioned the movement towards major depressive disorder and depression indications and will get more color along those about what those studies down the road.

But as you think about dosing with lumateperone and the certain engagement – and this indication should there be a material difference in dosing with the molecule in MDD or the depression indications beyond bipolar depression?.

So we believe in – just as a reminder that in bipolar disorder, we are looking at doses of 40 milligrams and 60 milligrams.

And this is the range where we saw an improvement in the schizophrenia program, the 60 milligrams of ITI-007 was positive in two studies and in one of those schizophrenia studies, the 40 milligram dose did not hit on the primary endpoint. But did improve the positive symptoms of hallucinations and delusions and did improve on the CGI.

And these are the two doses, the 40 and 60 milligrams that we've taken forward into our bipolar depression program. And they're at the same doses that we believe would be useful for the treatment of major depressive disorder.

Sharon, did you want to add?.

No, I just like to go back to your question on the six-week open-label safety study and just remind you that the purpose of that study was the primary outcome was the safety and tolerability.

And we were very pleased to see that you could in a real-world setting take patients, switch them off the drug that they were on, put them on lumateperone and see the improvements in the cardio metabolic parameters. And then when we switch them back, they again on certain of these parameters in just a short period of time worsened.

We monitored for the efficacy, really to know whether or not we were making patients worse. And we were not making patients worse. They remain stable and in fact as Kim said did improve. So I think I just wanted to put all of that into context..

Right, and then translating that back to the depression question is that then we did see symptoms of depression improve in patients with schizophrenia at these dose ranges as well. And so these are the dose ranges that we would consider taking forward for major depressive disorder..

Thanks. And just in terms of timing.

You mentioned we'll hear something on this potentially later this year but could that be a 2018 start for the MDD program?.

That's right..

Terrific. Thank you..

Thank you. And our next question comes from the line of Ritu Baral with Cowen. Your line is open..

Hi, this is Alex on for Ritu. I’ve one question on the NDA and then one on Parkinson’s.

On the NDA, have you communicated with FDA following the release of the first part of the safety study and if not can you update us on your plans to communicate with the FDA here, specifically on how much long-term safety data that they're going to require at the time of submission?.

So we are always in discussions with the FDA on all of our programs. So we're following the ICAs and FDA guidelines for our long-term safety database..

Okay, and then on Parkinson's, you mentioned that you're looking at sort of relevant non-motor symptoms, can you give us a sense of what the endpoints would be for depression, psychosis in that trial?.

Sure. So we actually are using the MDS-UPDRS, which includes a non-motor symptom subscale that measures all kinds of non-motor symptoms with depression and anxiety, cognition and other symptoms. And so we'll be looking at this actually in a variety of ways as the exploratory measures.

Keeping in mind that the study is designed as a safety study and not powered for typical significance on efficacy measures but looking for signals for efficacy using these exploratory endpoints..

Right, got it.

And just to be clear there won’t be an inclusion or something like on MADRS or HAM-D for depression?.

No..

Got it. Thanks guys..

Thank you. And our last question is from the line of Edward Nash with SunTrust. Your line is open..

Hi, thanks guys. I just wanted to ask one quick question is kind of fully in control of this question. So just so that I'm clear on the semantics here.

So with regard to long-term safety so may be I’ll ask it this way, will you have what the FDA would require by number of patients and time on drug exposure, by the time you file or do you just need it by the time it's actually approved, whatever that number – that base number maybe?.

Our understanding is that we will have everything we need and what we need is for approval..

Got it, perfect. Okay, that's what I’ll say its associated with approval not actual submissions, that's great.

The other question I had is just – I just might have missed, what is the current status with the Phase 3 with agitation associated with dementia and Alzheimer's – specifically in Alzheimer's, that’s still enrolling at this point?.

Yes, that’s right. It’s still enrolling..

Okay, well that one would be fully enrolled in 2018 as well as the other three for bipolar depression?.

Yes..

Perfect, great. Thanks so much, guys..

Thank you..

Thank you. And ladies and gentlemen, this concludes the Q&A session for today. I would like to turn the call back to Sharon Mates for her closing remarks..

Great. Thank you, operator and thank you all for joining the call. At ITCI, we are committed to developing novel treatments for patients suffering from neuro – psychiatric and neurodegenerative diseases. And as you heard on today's call, we continue to advance lumateperone and our diverse drug development pipeline.

And we look forward to updating you on our next call. With that operator, you can disconnect. Thank you..

Thank you, ladies and gentlemen. This concludes the program and you may all disconnect. Have a wonderful day..