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we seek to develop first-in-class medications with novel mechanisms that have the potential to treat CNS diseases and other diseases for which there are no previously marketed drugs; and

we seek to develop drugs that either can differentiate themselves in competitive markets by addressing aspects of CNS diseases and other diseases which are not adequately treated by currently marketed drugs or can be effective with fewer side effects.

complete the development of lumateperone for its lead indication, treatment of schizophrenia, and for additional neuropsychiatric indications, such as bipolar disorder, behavioral disturbances in dementia, including Alzheimer’s disease, residual symptoms in schizophrenia and major depressive disorder;

expand the commercial potential of lumateperone by investigating its usefulness in additional neurological areas, such as autism spectrum disorder, and in additional neuropsychiatric indications, such as sleep disorders associated with neuropsychiatric and neurological disorders;

continue to develop our phosphodiesterase (“PDE”) inhibitor compounds, such as ITI-214, for the treatment of CNS and non-CNS conditions, including cardiovascular disease;

advance earlier stage product candidates in our pipeline, such as ITI-333, for substance use disorders, pain and psychiatric comorbidities including depression and anxiety; and

develop our commercial capabilities to support the successful commercialization of our products.

initiation and progress of preclinical development and clinical trials for our product candidates;

achievement of regulatory milestones;

establishment and maintenance of key strategic relationships and new business initiatives including financings; and

development of organizational capabilities and managing our growth as we expand to become a fully integrated commercial organization.

In the fourth quarter of 2018, the U.S. Food and Drug Administration (“FDA”) accepted for review our new drug application (“NDA”) for lumateperone for the treatment of schizophrenia, representing a major milestone in the development of our lead product candidate.

We also made significant progress in building our commercial infrastructure in preparation for potential commercial launch of lumateperone, including the hiring of our commercial senior leadership team.

We continued to advance other product candidates in our pipeline, such as ITI-214 for Parkinson’s disease and heart failure and ITI-333 for substance-use disorders, pain and psychiatric comorbidities. In October 2018, we presented the results of our Phase 1/2 randomized, double-blind, placebo-controlled, multiple rising dose clinical trial to evaluate ITI-214, our PDE1 inhibitor, in patients with Parkinson’s disease and announced the favorable safety profile for ITI-214. In December 2018, we reported preclinical data on our ITI-333 product development candidate, a potential treatment for substance-use disorders, pain and psychiatric comorbidities, including depression and anxiety.

No increases to annual cash bonus targets for 2018. For 2018, the compensation committee determined not to increase annual cash bonus target percentages for our named executive officers; instead target bonus percentages remained constant from 2017. None of our named executive officers are guaranteed an annual cash bonus.

Reduction, or no increase, in the case of Dr. Mates, to the percentage of each named executive officer’s target bonus opportunity payable for 2018 performance. Our compensation committee determined that notwithstanding our meaningful accomplishments in 2018, which included important progress made in the development of our lead product candidate, development of our other product candidates and additional programs and the expansion of our commercial and other infrastructure, our stock price declined in 2018. As a result, and in order to reinforce our commitment to align executive pay with the Company’s performance and the interests of our stockholders for near- and long-term performance, our compensation committee determined that it would reduce, or not increase in the case of Dr. Mates, the percentage of each named executive officer’s target bonus opportunity payable for 2018 performance as compared to the 2017 bonus payments.

Reduction in value of equity grants in 2018. In the case of Dr. Mates and certain of our other executive officers, our compensation committee determined to reduce the value of 2018 equity grants by approximately 15% as compared to the 2017 equity grants.

Consideration of the appropriate mix of equity awards. The compensation committee incorporates performance-based equity awards when it determines that important milestones should form the basis of a performance-based equity grant and that such a grant would not promote excessive risk taking that could adversely impact the Company or its research or development of pharmaceutical products. The compensation committee believes that combining performance-based equity awards with time-vesting equity awards complements the performance-based awards and facilitates a focus on the totality of the Company’s ongoing and future activities as potential contributors to stock price appreciation. For example, in 2017, the compensation committee granted performance-based restricted stock units, one-third of each vested in 2018 and two-thirds of each will vest only upon the achievement of certain milestones, including the approval of an NDA by the FDA and achievement of certain comparative stockholder returns against our peers measured over a three-year period ending on December 31, 2019. The compensation committee considered grants of performance-based restricted stock units in 2018, but decided that since the majority of the milestones under the performance-based restricted stock unit awards granted in 2017 remain outstanding, it would not to grant additional performance-based restricted stock unit awards in 2018.

introduction of performance-based equity awards;

reduction in value of equity awards to align with stock price performance;

enhanced disclosure with respect to the performance metrics evaluated by our compensation committee when determining annual bonuses;

introduction of a new compensation peer group in 2017 based on new parameters that continued to apply in 2018; and

appointment of a lead independent director.