Why Minerva Shares Are Climbing

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Shares of Minerva Neurosciences Inc. (NASDAQ: NERV) saw a handy gain in Thursday’s session after it was announced that this company was amending its co-development agreement with Janssen Pharma. At the same time, Minerva will repurchase all of its shares owned by Johnson & Johnson Innovation.

Although, this amendment to the agreement and the stock repurchase are conditional upon the closing of the pending acquisition of Actelion by affiliates of Janssen and the approval by the European Commission.

Under the new agreement, Minerva will have global strategic control of the development of MIN-202 to treat insomnia, and Janssen will forego its right to royalties on MIN-202 insomnia sales in Minerva territories. Also Minerva will retain its current rights to MIN-202 for major depressive disorder (MDD), which include an exclusive license in the European Union, Switzerland, Liechtenstein, Iceland and Norway, with royalties payable by Minerva to Janssen, and royalties on sales payable by Janssen to Minerva elsewhere worldwide.

Payments to Minerva by Janssen under this new agreement include an upfront payment of $30 million, $20 million at the start of a Phase 3 insomnia trial for MIN-202 and $20 million when 50% of the patients are enrolled in this trial. Minerva will assume all financial responsibility for Phase 3 development costs for MIN-202 in insomnia.

All Minerva stock currently owned by Johnson & Johnson Innovation (approximately 3.9 million shares) represents about 10% of total Minerva shares outstanding. These shares will be repurchased by Minerva at par value of $.0001 per share, or roughly $389 in total.

Dr. Remy Luthringer, president and CEO of Minerva, commented:

We view the new agreement with Janssen as a structure that will ensure a more focused and efficient clinical development of MIN-202 in insomnia by Minerva. We look forward to continuing our collaboration with Janssen while accelerating the clinical advancement of our portfolio.  In addition, the infusion of financial resources under this agreement significantly extends Minerva`s financial runway.

Shares of Minerva were trading up 25% at $10.35 on Thursday, with a consensus analyst price target of $17.00 and a 52-week range of $6.50 to $15.84.