Atai Beckley NV (ATAI) 2021 Q3 法說會逐字稿

Good morning and welcome to the atai Life Sciences Third Quarter 2021 Financial Results and Corporate Update Conference Call. (Operator Instructions)

For opening remarks, I would like to introduce Chad Messer, Vice President of Investor Relations and Strategic Finance of atai Life Sciences. Please go ahead.

Thank you. Welcome, everyone, to the third quarter 2021 atai Life Sciences corporate update conference call. The press release reporting our financial results is available in the Investors and Media section of our website, www.atai.life, and our quarterly report on Form 10-Q ended September 30, 2021 will be filed today with the SEC.

Joining me today are Florian Brand, our Co-Founder and Chief Executive Officer; Dr. Srinivas Rao, our Co-Founder and Chief Scientific Officer; and Greg Weaver, our Chief Financial Officer.

During today's call, we will be making certain forward-looking statements that are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. While these statements represent management's current expectations and projections about future results and performance as of today, atai's results are subject to many risks and uncertainties that could cause results to differ materially from those expectations. In addition to any risks highlighted during this call, these statements are subject to additional risks described in our filings made with the Securities and Exchange Commission, including our final prospectus filed with the SEC on September 30, 2021. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of today, November 15, 2021, and except as required by law, atai claims any obligation to update such statements.

I would now like to turn the call over to atai CEO, Florian Brand. Florian?

Good morning, and thank you all for joining our 2021 third quarter earnings call today. To begin, I will provide a few introductory comments and reiterate the strategy underpinning our vision to heal mental health disorders so that everyone, everywhere can live a more fulfilled life. Then my Co-Founder and CSO, Srini, will review highlights from our drug development pipeline. And finally, our CFO, Greg, will provide the quarterly financial report, followed by the Q&A.

Building on the momentum of our successful IPO in NASDAQ in June, we have continued to advance our innovative and diversified pipeline focused on differentiated approaches to address important unmet patient needs in mental health. In addition, we anticipate further growing our drug development pipeline and enabling technologies through a buy-and-build approach and we'll remain highly active in business development. In response to the heterogeneous mental health patient population, we plan to tailor our treatments to individual patient needs by using a diverse set of biomarkers, supported by digital therapeutics and robust insights from our multimodal data approach.

Just last week, we were excited to see strong positive Phase IIb data from COMPASS Pathways, the very first company that we funded to research the therapeutic potential of psychedelics. This clinical trial investigated COMPASS's proprietary formulation of psilocybin, COMP360. It demonstrated rapid onset of effect and durability in treatment-resistant depression. In a few minutes, Srini will provide further details on these important results.

Later this year, we anticipate another top line data readout of our Phase IIa biomarker study with RL-007 in cognitive impairment associated with schizophrenia, or CIAS. We were encouraged by the interim data readout earlier this quarter, and we are eagerly anticipating the full results of the study, given the lack of progress in developing treatments for CIAS, which still has no approved treatments.

As for our discovery-stage assets, earlier this quarter, we announced the launch of PsyProtix, a precision psychiatry company focused on developing therapeutics for mental health indications. PsyProtix will study metabolic mechanisms associated with depression symptoms with the goal of deriving more tailored treatments to better meet individual patient needs. We expect to launch clinical trials in 2023.

We have also seen great progress on our enabling technologies. For example, InnarisBio, which is developing a sol-gel-based excipient technology to effectively transport compounds directly from the nose to the brain, recently completed a pre-clinical proof-of-principle study. We anticipate applying this technology across various drug candidates in our pipeline.

In September, our company Introspect launched a user acceptability study of our digital therapeutic app in patients with treatment-resistant depression undergoing ketamine therapy. In addition, our BCI company, Psyber, will soon begin testing a virtual reality and neurofeedback-based proof-of-concept device to support the in-clinic patient experience. We are currently optimizing the device ahead of inclusion in the clinical trials of Viridia, EmpathBio, Revixia, and DemeRx IB. We are making great progress towards our goal of a broad pipeline of novel, transformative mental health therapies tailored to patient needs.

I will now hand over to Srini to take us through some of our key pipeline updates and upcoming milestones. Srini?

Thanks, Florian. In summary, we have a broad array of exciting assets in or nearing the clinic. On this call, I will focus on the programs with the most near-term visibility and highlight upcoming milestones.

I'll start with COMPASS Pathways and its development candidate COMP360. The latter is a proprietary formulation of synthetic psilocybin, a 5-HT2A receptor agonist being developed as an oral, potentially rapid-acting antidepressant. We'd like to offer huge congratulations to the COMP360 team.

Last week COMPASS, in which we own a strategic stake of 19.4%, announced positive top line results from its Phase IIb randomized, dose-controlled, double-blind trial of COMP360 for the treatment of treatment-resistant depression, or TRD. The 233-patient study met its primary end point with a statistically significant 6.6 point reduction from baseline to week 3 on the Montgomery-Asberg Depression Rating Scale, or MADRS, a widely used measure of depressive symptomatology. The trial demonstrated that COMP360 treatment resulted in a rapid response with statistically significant changes in the MADRS noted at 24 hours post dose when comparing results with 25 mg to the 1 mg dose arms. Further, durability of efficacy was also found as measured by response and remission rates at 12 weeks. Finally, COMP360 was generally well tolerated with more than 90% of treatment-emergent adverse events mild or moderate in severity.

In summary, we are highly encouraged by this data showing both a rapid and durable anti-depressive effect in a difficult-to-treat population, with limited treatment options. We believe these results not only bode well for the continued progress of COMPASS's program, but confirm our belief that our pipeline of psychedelic drugs with different routes of administration, durations of actions, and pharmacology can help improve the lives of patients with serious mental health disorders by improving on the current standard of care.

Next, I'll move to Perception Neuroscience, which is developing PCN-101, a glutamatergic modulator for the treatment of TRD. In September, we initiated the Phase IIa trial of PCN-101. This randomized, double-blind, placebo-controlled trial testing an IV formulation of R-ketamine will be conducted across multiple sites in Europe and the U.S. and aims to enroll 93 patients diagnosed with TRD. We anticipate the study running through late 2022. In parallel, we intend to conclude a Phase I comparative bioavailability study to bridge from the IV formulation to a subcutaneous formulation of PCN-101, one that we believe will support at-home use. As we've mentioned before, we're excited about this potential aspect of differentiation, particularly from the perspectives of scalability and commercial potential for a product delivered at home.

These trials build upon extensive preclinical and strong preliminary clinical data that support the hypothesis that R-ketamine may be efficacious at sub-dissociative doses in contrast to S-ketamine. In pre-clinical models, R-ketamine has demonstrated higher potency, greater durability, and lower abuse potential comparing to S-ketamine. In February 2021, Perception announced positive Phase I results demonstrating the safety and tolerability of PCN-101 in 58 subjects treated at doses of up to 150 milligrams IV. And additional details of this trial were made available in late September. In summary, we found that R-ketamine had no or minimal dissociative effects at the 30 and 60 milligram doses, respectively, and these are the doses that are being tested in the Phase IIa trial.

In April 2021, Recognify initiated a 32-patient Phase IIa proof-of-mechanism study for RL-007, a GABA, glutamate, and cholinergic receptor modulator for the treatment of cognitive impairment associated with schizophrenia, or CIAS. The Phase IIa trial is designed to evaluate the effects of RL-007 on safety, tolerability, and quantitative electroencephalogram, or qEEG-based measures that are viewed as biomarkers for cognition. This builds on a previous study involving a scopolamine challenge in healthy volunteers, which demonstrated that RL-007 both improved verbal memory and partially restored the shifts in qEEG spectral power induced by scopolamine.

Of note, the results of a recently completed interim analysis of qEEG data from the 8 patients in the first cohort were encouraging. We observed spectral shifts of qEEG that were similar qualitatively and quantitatively to what were previously seen in the scopolamine challenge trial. As a result, atai advanced a portion of a future milestone payment aiming to accelerate initiation of the subsequent Phase II trial. Broadly, we anticipate that this will be a double-blind, placebo-controlled, proof-of-concept study focusing on more traditional cognitive endpoints, including subsets of the MATRICS battery. We expect to announce top line results of the Phase IIa trial before the end of the year, and we will be reviewing a confluence of data, including spectral shifts on qEEG, evoked potential information and changes in measurements of cognition to help us support a decision to continue the clinical advancement of this drug candidate.

Next, Gaba Therapeutics' primary program is GRX-917, an oral formulation of a deuterated version of etifoxine. Mechanistically, etifoxine and GRX-917 have been found preclinically to increase the production of neurosteroids, including allopregnanolone, an IV formulation of which was approved in the United States in 2019 for the treatment of postpartum depression. This mechanism of action is thought to underlie etifoxine's rapid onset of anxiolytic activity, which is similar to that observed with benzodiazepines but without the sedation, cognitive impairment, or abuse and dependence risk associated with these class of compounds. Further, etifoxine has an extensive safety database which we believe will greatly de-risk the future development of GRX-917. Like etifoxine, we hypothesize that GRX-917 will provide rapid anxiolytic activity with improved tolerability compared to current treatments for anxiety and deuteration is intended to enable less frequent dosing and/or low doses with GRX-917 than etifoxine.

In June 2021, we initiated a randomized, double-blind, placebo-controlled Phase I trial in Australia with plans to enroll up to 76 healthy adults. The study is a single ascending dose/multiple ascending dose design focusing on safety and tolerability, pharmacokinetics, as well as pharmacodynamics using quantitative EEG. Based upon the mechanism of action of GRX-917, we're using the qEEG as a target engagement biomarker looking for increased relative spectral power in the beta band. Such changes have been demonstrated with IV allopregnanolone and related compounds and were also noted in a Phase I trial of etifoxine that we conducted in 2019. The single ascending dose element of the GRX-917 Phase I trial was recently completed and the multiple ascending dose component of the trial is ongoing. Offline data for the entirety of the GRX-917 Phase I trial are expected by the middle of 2022.

Moving to DemeRx IB. We are developing DMX-1002, an oral formulation of ibogaine, a naturally occurring psychedelic compound, as a treatment for opioid use disorder. In September, we dosed the first subject in the Phase I component of an exploratory Phase I/IIa trial of DMX-1002 in subjects in the U.K. The Phase I/IIa trial is designed to assess safety, tolerability, pharmacokinetics and efficacy, and the results will inform future studies in patients with opioid use disorder. We expect to obtain safety data from the Phase I portion of this trial in early 2022.

Lastly, a quick update on EntheogeniX, which is developing structurally novel psychedelic compounds using a machine-learning based computational chemistry platform. EntheogeniX has created and pharmacologically tested over 250 novel compounds generated by this platform. Lead candidate selection is currently ongoing, which will further bolster our extensive early-stage pipeline. We will provide a more detailed update on this and other early-stage programs and associated milestones as we enter next year.

I will now turn the call over to Greg for an overview of our financial highlights.

Thank you, Srini. atai continues to maintain its excellent cash position with cash and equivalents totaling $430.3 million as of September 30, 2021, as compared to $453.6 million as of June 30, 2021. The 3-month net use of cash of $23.3 million was driven by $27.2 million in investments in platform companies and net operating expenses, offset by $2.9 million in net cash proceeds from the conversion of convertible notes and payment of IPO-related costs in the quarter. And consistent with prior guidance, our cash runway is expected to fund our operations into 2024.

Third quarter 2021 total operating expenses were $33.6 million as compared to $61.3 million in Q2. The decrease in total OpEx of $27.7 million was driven primarily by a decrease in the non-cash stock-based compensation of $25.5 million as compared to Q2. In addition, looking back in Q2, we recorded acquired one-time in-process R&D expense of $8 million from our initial consolidation of Neuronasal. These decreases were offset by an increase in R&D expenses, excluding the stock-based comp, of $1.1 million from $6.9 million in Q2 to $8.1 million in Q3 as we added R&D personnel and advancements in our clinical programs. The increase in G&A expenses, excluding stock-based compensation, of $4.8 million from $8.7 million in Q2 to $13.5 million in Q3 was due to growth in our G&A costs related to personnel and benefits and D&O insurance, all related to building and operating atai as a public company. And a brief comment regarding the decrease of $25 million in stock-based compensation was at the current Q3 total of $12.2 million in stock-based comp represents the run rate of normal vesting conditions going forward.

Thanks again. I'll hand the call back to Florian.

Thank you, Greg and Srini. I would like to thank the entire atai team as well as our supportive investors for their contributions to all we've achieved this quarter. While we believe the for-profit model is the fastest way of bringing new solutions to patients in need, we also understand that the mental health crisis will not be solved by for-profit models alone. So I'm proud to report that in October we announced the launch of our new philanthropic program atai Impact. We believe that commercial and nonprofit entities must stand shoulder to shoulder to tackle this global crisis. The atai Impact program will initially be funded by 1% of the gross proceeds from our IPO and equity contributions from shareholders and founders. The program will support and collaborate with nonprofits and institutions that share atai's vision of healing mental health disorders.

With our strong balance sheet and broad portfolio, we continue to solidify our leadership position as an innovative drug developer within mental health. Our differentiated model has been validated by partnerships with large pharma and academic institutions. By design, our company is structured to maximize the probability of success in drug development through a combination of 3 elements: a unique portfolio approach; a focus on developing compounds with prior evidence in humans; and a milestone-based approach to capital allocation.

We are pleased with our progress in Q3 and look forward to the further value-driving catalysts across our pipeline. Most notably, we expect the top line data for Recognify's Phase IIa by the end of 2021, followed by the GABA Phase I data in early 2022. We look forward to providing updates on our progress as we continue to drive our business forward.

With that, we are happy to take questions.

(Operator Instructions) Our first question comes from the line of Charles Duncan with Cantor Fitzgerald.

Florian and team, congratulations on a good quarter of progress since coming public recently. Had a quick question on RL-007 and specifically really what could be a win out of the upcoming Phase IIa. And it sounds like -- I'm wondering if that's a nice-to-have not a need-to-have in terms of designing a Phase IIb and can you imagine being in Phase IIb in the second half of 2022. And then I'd like to ask you about the color -- any color that you can provide on the 8 patients in the first cohort. Any further information in terms of the observation and spectral shift that you saw.

So as I've discussed on previously, basically, there were a couple of things that we were looking for in the Phase IIa. The first sort of tier was spectral shifts on quantitative EEG that were qualitatively and quantitatively similar to what was observed previously in the scopolamine challenge Phase I trial. The next tier down from that, if you will, were the evoked potentials. So we looked at mismatch negativity and P170 and P300 with an oddball task and the final tier are the cognitive assessments, specifically really focusing on verbal memory but also sustained attention. So those are sort of the 3 tiers I will say right off the top that this trial really wasn't set up or designed adequately -- powered in terms of size for cognitive -- to truly assess robustly the cognitive impact of the compound. What we're really looking for there is some sort of correlation with some other marker.

So the first 8 patients did show quantitative EEG results vis-a-vis spectral power shifts that were comparable to what we saw earlier. And that's what we found encouraging and that's, of course, what led to the advancement of a portion of the milestone to get the next trial up and running a little bit sooner and, hopefully, save us about a quarter. Obviously, we'll be looking at the totality of the data from all 4 cohorts before making a go/no-go decision on that next trial. We haven't guided on…

Okay.

Yes, go ahead.

No, I'm sorry, I think that you were going to address the timing question.

Yes. We really haven't guided on that, to be honest with you. But we said broadly that once this trial wraps up, we'll be starting another trial.

Okay. And then one additional question, then I'll hop back in the queue, and that is on COMP360. Saw the data here recently and know that you have at least 2 or 3 other programs in depression. And I guess I'm wondering if the results impact your assumptions in any way regarding the sizing or timing or control paradigm for further studies in treatment-resistant depression. And maybe I guess I'm wondering what you think about the primary endpoint of 3-week efficacy versus durability. Any further color on your impressions from that COMP360 trial.

Before I hand it back to Srini, maybe let me quickly take the opportunity to again congratulate the entire COMPASS team for last week's data readout. So that was a really big moment for us. As you know, COMPASS was the very first company that we funded in this space, and we perceived this as greatly validating for their psilocybin assisted therapy but also for, to your point, the other psychedelic-assisted therapies that we have in development. So, all in all, last week was greatly encouraging for the COMP360 data, but for psychedelic approaches in mental health writ large. And with that, Srini, maybe you want to comment a little bit further on the details.

Yes. So, Charles, addressing your first point around design, it's certainly -- these are some things that we'll be looking into in a little bit more detail. There are some fundamental differences with what we're doing versus what COMPASS did. Of course, psilocybin has very long-duration psychedelic effect. Compounds that we're designing are much shorter. And, of course, this question of how duration of psychedelic effects impacts durability is something that's a bit open at this point. Our trials were always configured for redosing, and I think that's an important element. We're going to be figure -- ultimately, we want to use digital therapeutics to help guide those redosing decisions so that there's some flexibility. I, obviously, can't speak to how COMPASS is going to approach this. So in terms of the big picture, I would say the design hasn't fundamentally changed but obviously there'll be a lot of detailed learning as we pick through this -- as we pick through this data and more data becomes available to us.

In terms of the 3-week end point, I think that was a pretty reasonable end point. And, again, let's be honest, the trial -- COMPASS really nailed it on that 3-week end point, particularly when you start comparing it to some of the S-ketamine data. You're familiar with the approval package for S-ketamine. It really looked at 3 shorter-term trials 4-week trials that were known as TRANSFORM I, II and III. Transform I and III actually failed. TRANSFORM-II was the one that was really the basis of approval in terms of the short-term efficacy, and they had a much smaller of these scores mean change in MADRS of 4.0 that compared to 6.6 on ours. So it's over 50% increase in the size, the magnitude of the response and, of course, ours is based on a single administration whereas S-ketamine is 2 administrations per week. That's how the trials were configured as well. So substantially improved logistics for this study and for COMP360 versus S-ketamine.

Our next question comes from the line of Neena Bitritto-Garg with Citi.

So just on the Perception Neuroscience's update. Can you talk a little bit more about the bridging study that you're planning on conducting for the subcutaneous dose and when we could see data from that study?

Yes. So as you're aware, the current trial is using an IV formulation of R-ketamine. This is very comparable to how Janssen conducted their S-ketamine program. The initial trial was really based on an IV formulation. Of course, as I mentioned, in parallel we are doing the bioavailability study. That is fundamentally looking at the PK of this IV formulation which is a 40-minute infusion versus some subcutaneous formulations that are in development now. And the idea, of course, is to try and match as closely as possible the IV infusion profile, the PK within the bioequivalence limits, broadly speaking. So we want to make sure that it's not markedly shorter, that you're not seeing more peakiness, et cetera, that could impact both safety and efficacy. In terms of when those endpoints -- when those results are anticipated, it's roughly contemporaneous with the Phase IIa results.

Our next question comes from the line of Ritu Baral with Cowen and Company.

I've got at least 2. Just following up on Neena's question on 101 and I guess the PK. First, I guess starting with the Phase II, what's the scale that's going to best inform magnitude of dissociative effect and potential separation from the SPRAVATO profile? And then, Srini, as you talk about that PK impact on the sub -- from the subcu and what you want to see, how should we be thinking about peaks in area under the curve as far as the dissociative side effects versus efficacy? Like if you bring the peak down, could you improve? Could that be one of the reasons that there would be less disassociation, but is there a fear that, that contributes to efficacy? How should we be looking at that PK curve and then what scale should we be looking at to separate SPRAVATO -- 101 from its competition?

Yes. That's a great question. So in terms of the scales, of course, we're going to be looking at the CADSS. That seems to be the scale of choice for a lot of these trials. And, of course, it's what was used in a number of the ketamine studies as well as in the R-ketamine and, of course, in the S-ketamine label. There are some challenges with the CADSS. Its resolution is not great. So we're also looking at things like the 5D-ASC and the BPRS. So those are the other trials that are -- the other instruments that are really the things that we're focusing on.

In terms of this question around AUC versus peak, et cetera, that's a really good one, assuming that we see the efficacy that we're hoping for with this next trial. Our initial plan is to really match that as closely as possible rather than deviating too far from it. One would anticipate that a higher peak would probably result in increase -- or decrease in tolerability, but how that impacts efficacy is a little bit more difficult to really assess a priori. So, again, our goal is to really try and match as closely as possible the current PK profile.

Got it. And my follow-up is on deuterated etifoxine 917. You mentioned that you're looking for again a qEEG spectral shift in the beta band. Can you talk to what percentage shift in the beta band has been seen from the other GABAergic drugs? What's the threshold that you're looking for? And you mentioned that the single ascending dose data would be available in, I think, early 2022. Should we be able to see it in the single dose or would that be from the multiple ascending dose portion?

Yes. On the first point, we're not really giving a lot of detail in terms of the magnitude of spectral shifts. We are looking for robust changes in spectral shift there. And that's basically as much as we're saying at the moment. I don't think we've really ascertained when we're going to be releasing which data. Yes, the SAD data -- the SAD component of the trial is wrapped up. The quantitative EEG data will be coming from both the SAD elements and the MAD elements. And in fact, the MAD forms a bit of a replication sample for the SAD data. I think we'll probably end up waiting for both before going into any kind of detail on these results.

Our next question comes from Judah Frommer with Credit Suisse.

First, I was just hoping we could maybe back up a little bit on 007. We've gotten a few questions on this. Maybe unpacking the design of the Phase IIa trial, we're next steps in terms of the cognitive endpoints that you'll be looking at, always designed within the plan. And once you get those, when you talk about the decision-making point, is that an incremental IIa versus a IIb or how should we think about that?

Yes. I think -- let's take that first -- the last question first. So in terms of what the next trial looks like, we're still trying to figure -- we're still working on it, to be honest with you. And the way I intend to -- well, the way I interpret IIa versus to be IIb, IIb could be supportive of an end of Phase II meaning and again that's kind of where some of the decision-making lies.

I didn't quite understand the first question clearly. We will be using parts of the MATRICS battery, the consensus battery in terms of endpoints. It may be the entire thing. It may just be parts. These are some of the considerations that we're focusing on now. There are some pretty important design considerations that we're still working through. And, of course, durability or duration of efficacy is something else that's still under consideration.

Okay. And do you have size of the active and placebo arms in the next portion?

We will have placebo, yes.

Okay. Do you know how many patients yet?

Not yet, no. It's going to depend entirely on the design.

Got it.

And, of course, part of it is really getting a good handle on what we're seeing in terms of some of the effect sizes in this trial. So at least that'll give us some color around what we can expect and that's going to obviously drive some of the powering decisions.

Okay, perfect. And then on GABA, this may be just a housekeeping item, but I think in Phase II you had talked about expecting the Phase I data early 2022, now mid-2022. Did anything change in terms of recruiting timelines or impacted by COVID in any way?

Yes. Well, you hit the nail on the head on that one. So we did -- recruitment was a little slower than we anticipated all the way through the trial. If you think about Australia, they do depend on students for these trials. They also depend on folks that are kind of traveling through. Both of these were heavily curtailed during some of the lockdowns that they had. So things definitely did slow down. There's a bit of a clearing of backlog that's occurring at the sites at the moment. So we're obviously pushing very hard to get our cohorts in sooner, but we just decided that it makes sense to be on the conservative side and push out the guidance a little bit.

Got it, okay. And last one, just on the cash runway tied to the pipeline programs that you have. How should we think about, I guess, prioritization of cash towards various programs? You'll want to get presumably these programs that are further along as far as they can get as you get toward the end of that cash flow runway. But is there any way to talk about prioritization amongst the programs you've highlighted today?

Yes. Thanks, Judah. It's Greg Weaver. That's a good question. We give a lot of thought to the allocation of the cash going forward. Keep in mind, we have runway now at $430 million right through '22 and '23. And we're in the planning stages right now in Q4 like most companies laying out details around our 2022 priorities. But I think safe to say, we're going to continue to drive on all fronts. We've got a very strong balance sheet, no reason to think that we'll be deprioritizing anything. I think we're going to continue to push on the Phase II programs, several moving into Phase I in 2022 along with, as Florian mentioned earlier, BD continues to be an area of focus for the company. We'll continue to push on that front as well. So in my words, the pedals to the metal.

Our next question comes from Andrew Tsai with Jefferies.

So on 007, one more question is just, sounds like there's also a "promising" signal on ERP biomarker data. So maybe P100, P300. So I guess the first question is, is it fair to assume you're seeing some trend around say P300 reduction? And secondly would be, perhaps give us some context how much benefit P300, for instance, shows for the other drugs that do benefit cognition or even schizophrenia. Just some framework would be helpful.

Yes. I don't want to oversell what we're seeing at the moment in terms of it is from the first cohort, as I mentioned. There's only 8 subjects. And, again, it's a little early to really get into the details. As I mentioned, we're really focused on the spectral shifts and replication of the results in the previous trial so that's really what we focused on that first cohort. We will look at the entirety of the data at that point. We've got a really good advisory board that'll be giving us color on how to proceed and how the magnitude of the changes that we're seeing really compare to other compounds across both sets of evoked potentials with the mismatch negativity as well as the P170, P300 as part of oddball test. So, again, I don't think we're really in a position to get into the details of that just yet. Once we have the totality of the data, we'll do so.

Makes sense. And so just thinking about year-end data, I guess, can you confirm how many dose cohorts of data we are getting? Fair to assume you looked at the lowest dose cohort and the interim look? And then should we expect some dose response?

Yes. So this is actually up on clinicaltrials.gov for those that are interested. But essentially there's 4 cohorts here. And as some of you may have heard, I'm really -- we're really looking at the lower doses because in both animal data -- in animal models and in humans so far, the lower doses are the ones that are primarily associated with the neurotrophic or procognitive effect, whereas the higher doses were really more focused on analgesia. So that's what we're looking at in some details of 10, 20, 40, and 80. We didn't follow a linear or a typical ascending sequence just because of the very well-known safety profile of this compound. So we did look at the higher dose first, and we're going to backfill with the lower doses. We are then going to be doing some -- we are definitely looking at correlation, of course, and seeing if there's a bond. But once again, really don't have that data -- those results yet to talk about it.

Our next question comes from Esther Hong with Berenberg.

I just wanted to focus on the Phase I dose-ranging trial for intranasal NAC for mTBI. That data is expected before the end of this year. What are your expectations for this study? And I believe the trial is also looking at biomarkers. Which biomarkers are there -- are you looking at?

So that trial did get pushed out in time. There's a couple of reasons for that. Most important is the biomarker. So we are looking at MRS, magnetic resonance spectroscopy, and we are looking for alterations in N-acetylcysteine levels with glutathione levels within the brain. As it turns out, that's a very specialized -- it takes specialized equipment. It also takes a lot of personnel with a great deal of experience to do this adequately. And we did pull on board someone who is a imaging specialist to really -- within the entire team to really help this trial along. In the end we decided to bring this trial to the United States and run it under an IND. The sites that can do this -- ultimately, we looked at several different countries, including Australia and New Zealand. And ultimately just ended up concluding that we were most comfortable in bringing this back to the United States and hence the delay on this particular trial.

Our next question comes from Brian Abrahams with RBC Capital Markets.

Maybe starting off on 917 deuterated etifoxine. I was wondering if you could expand a little bit on your learnings thus far from the single ascending dose study. And I realize it's early days, but I guess curious on the PK, what you're seeing with respect to deuteration's potential impact on future dosing frequency, if you have confidence based on what you're seeing that you can get to one or 2 times a day dosing. What you're seeing with regard to safety relative to the non-deuterated where, obviously, there's a nice large safety database?

And then maybe following up on Ritu's question on the quantitative EEG. Realize it's, again, still early, but do you have any sense of whether or not you might be able to get to a place with multiple doses that's equivalent or even better than what's been seen with the non-deuterated form or with allopregnanolone? And then a couple of follow-ups.

Yes. Again, there's really not a lot that we're sharing on this particular -- on the SAD element at the moment. We're still analyzing all that data, and we'll put it all together. And, of course, we're also awaiting the MAD results to piece this all together into a coherent story. Certainly the expectation that we have is that because we'll be able to push doses higher, certainly exposure's higher, we may very well see an increase in quantitative EEG signals over that which was seen with etifoxine itself and maybe approaching what you see with a direct agonist like allopregnanolone. But we haven't got that data yet to really be able to provide any color.

Okay. No, that's fair enough. And I guess how does the half-life compare for the deuterated versus non-deuterated form?

Again, we don't have all of the data in hand yet, so I really don't want to provide anything until we have that and can speak to it in totality.

Got it. Okay. And then you've talked a lot about the expectation to remain very active in business development. Was wondering if you could maybe talk a little bit about that the types of deals that you envisioned doing going forward. Will these be more along the lines of enabling technologies, platforms, products? Where do you see the next dollars being spent on that front in terms of expansions?

Yes. Sure, happy to take this one, Brian. So you mentioned some of the areas that we're active in, and we anticipate to remain very active in all of those. So we truly believe in the potential of and the complementary benefit of digital therapeutics. So we anticipate to do more -- to invest more in that area, which is also clearly linked to data, which will ultimately be needed in our perspective to tailor the therapies much more to the patient needs moving towards the precision psychiatry approach. This area will be -- is and remains of high interest to us.

In addition, on the enabling technology side, we also see potential there to add more complementary approaches to having very, very interesting discussions here, and ultimately, we truly believe that there's no one-size-fits-all solution in mental health. We truly believe that we will need a great array of tools and treatments in this area. Hence, we also see a great potential to add further treatments and therapies to our existing drug development pipeline.

Got it. That's really helpful. Maybe one more for me, if I could. I guess a question on the financials for Greg. You talked about the base SG&A spend. I was wondering how should we think about the base SG&A run rate going forward and how the mix of R&D and SG&A may evolve as the company continues to grow but also the clinical trials advance.

And then I guess also along those lines, you talked about the components of stock-based compensation and that we're at a normalized run rate now this quarter relative to last for vestings. Is this run rate relative -- that we should be thinking about relative to overall spend because the proportion does look to be a bit on the higher end of peers? Or should we think about this more as an absolute run rate where the magnitude relative to OpEx will I guess decline as OpEx grows and the company matures?

A couple things there to unpack. Let me take the last one first. If you recall back in Q2 we had a spike in investing related to our IPO in noncash stock comp. So that dropped off significantly in Q3 so that the $12 million number, I'm anticipating while it's lumpy quarter to quarter, is more indicative of what we'll see going forward, not so much on a percentage basis but as a benchmark for guidance going forward in noncash stock comp.

In terms of the actual OpEx, R&D and G&A, I think over the quarters ahead, we'll see an increase in R&D, and I think more of a normalization of G&A. So a couple concepts there to consider; one is if you reflect back on just headcount, we started this year 2021 with maybe 30 to 40 employees, and we've doubled that this year. Anticipating that that'll continue to increase as we build out our capabilities internally both focused on R&D and G&A. So I think while it's more heavily weighted initially on G&A, I think that'll be more in balance as we go forward. And so I'll stop short of specific guidance as we're building out the game plan for 2022 right now. But that would hopefully be helpful.

That's super helpful.

Our next question comes from Elemer Piros with ROTH Capital Partners.

With the focus on COMP360 last week, Srini, I was wondering if you could tell us how your 3 other depression programs might complement on psilocybin-based therapies. And you already started talking about R-ketamine, but if you could perhaps further elaborate if, God forbid, all 4 would get approved, how would they be used differentially?

Well, certainly, the pharmacology of several of these compounds are different than that of DMT or psilocybin. So R-ketamine is glutamatergic in nature, Salvinorin A has an opioid-based mechanism, a kappa-opioid-based mechanism. So we anticipate, and this is a hypothesis, but we anticipate being able to pick up different subsets of the TRD population using pharmacologies. That's, obviously, an important element. As we've discussed, R-ketamine asset is intended for at-home use. The other assets we would anticipate being used on out -- in-clinic basis. So in that sense, there are some internal points of differentiation as well.

The DMT compound, in many ways, is designed to slot into the infrastructure that's being deployed for S-ketamine currently. So it's a much shorter duration compound. We anticipate where we are dosing with that compared to psilocybin. Obviously, the logistics are a little bit simpler when a compound has a shorter half-life, and we intend -- and we also are developing it in combination with our digital therapeutics, both software and hardware-based really to support the site and the physician to simplify the administration of the classical opioid -- sorry, a classical psychedelic in this context.

Okay. Do you envision a combination or a subsequent administration of these various compounds in the same patient?

Yes. That's a really interesting question. Of course, there's different patients, but there's also different points in the patient's journey. One can certainly think of an induction and maintenance type approach for some of these. For example, could you anticipate using psilocybin first to really get the patient over the hump as it were, and then looking at shorter acting compounds whether they're DMT or R-ketamine. Certainly, that's all within scope. Will they be developed as such? Probably not. That tends to be a very complex development program. But in real world, I can totally imagine how these things would be put together for individual patient benefit.

And, again, we are looking at biomarker strategies, be they digital biomarkers or biological biomarkers, including metabolomic profiling. We did announce PsyProtix, for example, in that regard. And hopefully, the data from this will also help inform which compound is best suited for which patient, and perhaps when a given compound is best suited for a patient, again, based on the patient's journey.

Our next question comes from Sumant Kulkarni with Canaccord.

I have 3. A couple of product specific ones and one on strategy. The first on PCN-101. At what point do you expect to have more comfort around the potential for the product's at-home use or is that more of a wait and watch until the approval kind of thing? That's my first question.

I think that will really occur once we have these data from the Phase IIa. So as I mentioned in the call, we have the 30 and 60 mg doses that we're taking forward. We did provide some color on those. You can see that those were either non-dissociative completely or minimally dissociative, and quite different than what you see with S-ketamine. Obviously, that was in a healthy volunteer population. Things tend to look a little bit different in patients. So we're looking forward to those data in that trial and that's really going to help drive some decisions. It could be surprising, however, if the 30 mg dose is profoundly dissociative, given what we know about the compound.

Understood. On DMX-1002, with your Phase I/IIa study results that are due in early 2022, what would you qualify as success, especially relative to what we know already about the safety profile of ibogaine?

Yes. So we're characterizing a few things. Obviously, the normal safety and tolerability parameters, doing this in a very robust and a rigorous trial, that's obviously important, making sure that there's resolution. We know that, for example, there's a lot of ataxia and stuff that occurs with these trials, understanding what the time course for resolution of all those instances. There's a signal that's been talked about in the literature around cardiovascular liability, and we're obviously looking very closely at the EKGs or ECGs in the trials to understand the magnitude of changes that we'll be seeing there. All of these factors will be taken together to help guide dosing decisions for the Phase II element of the trial.

And my last question is on strategy. We know it's still quite fresh, but have you begun to see any impact from the COMP360 Phase IIb data set and the tone of discussions or prices of assets in the psychedelic space that might still be looking for partnering?

A little early days yet. I don't know, Florian, if you've heard or seen anything.

Yes. If I -- could you repeat the question clearly. Did you say whether there was any impact of, to ensure that I understood it correctly, on prices of assets, is that what you said?

Yes. Now that we have the COMP360 data set in hand, have you seen any change in the tone of your discussions with psychedelic potential partners or on the prices of assets themselves given what we know about this data set?

Yes, to reiterate Srini's point, I think that's very early so there was no direct impact that we realized in our discussion so far. Again, I think for us, it's highly encouraging, highly validating for what we are doing, and that holds also true for other complementary compounds and technologies that we are evaluating to add to the platform, yes.

(Operator Instructions) Our next question comes from the line of Patrick Trucchio with H.C. Wainwright.

This is [Jason] speaking for Patrick. I just had one question is on RL-007. Can you discuss a little bit more about the mechanism of action for RL-007 and what differentiates it from many of the other compounds being developed for CIAS? And then related to this is, how is the Phase II trial can further validate their potential differentiation?

Yes. That's a good question. So the pharmacology of this compound is quite complex. It doesn't bind on the same sites as other traditional compounds, so it's difficult to do in vitro binding experiments to understand the binding potency and efficacy against these receptors. So the way this has been done today is using antagonist studies. As I mentioned, in animal models you're seeing a neurotrophic effect at lower doses, analgesic effects at higher doses, GABAB antagonists -- I think it's antagonists, yes, the GABAB antagonists actually do mitigate some of the neurotrophic effects as do some of the cholinergic compounds.

So again, it seems to be hitting multiple receptor systems to provide its benefit. Conversely most GABA agents do have a pretty pronounced -- have pretty pronounced side effects. That doesn't seem to be the case here. That's one of the reasons the doses were pushed pretty aggressively in existing clinical trials. So how does this compare? Well, a lot of those are [glut] agents. These are glutamatergic compounds or glycine compounds. So they're a little bit different in terms of their pharmacology. I would suspect a lot of this is ultimately going to be -- is going to end up being complementary to one another. So I'm pretty encouraged. I hope more than one of these compounds makes it through the gauntlet of Phase II and Phase III trials, quite frankly. I think that there's a huge unmet medical need in terms of the patients and piecing it together with these different compounds and different compound classes is going to be very useful, even within the same patient, dosing them with more than one could be very beneficial.

Our next question comes from Nathan Weinstein with Aegis Capital.

Question on COMP360. The rapidity of onset that was confirmed in the Phase IIb seems to highlight a benefit of psilocybin versus SSRIs for example. So could I trouble you to opine on what that might one day mean for patients in terms of use in an acute care or emergency mental health setting?

Yes. That's a good question. So that's -- certainly the rapidity of onset is one of the motivators that was one of the motivators presumably for why S-ketamine ultimately got a suicidal indication in the label. One could certainly anticipate something like that happening with this compound. So you certainly do have a day in the clinic and if someone walks in at 1 in the morning, it's probably not the best time to be doing this. But certainly, after some initial stabilization, it does make a great deal of sense to actually use this compound in such a patient population.

Our next question is a follow-up from Ritu Baral with Cowen and Company.

I'll keep it quick. Florian, you spoke about digital therapeutics and bringing them into clinical development programs on a relatively early basis. Can you talk -- can you speak to the regulatory discussions around building these programs with digital therapeutics and receptivity of either the FDA or European authorities on their incorporation?

Yes, Srini, if you want to jump in.

Okay. So the various elements here have already been through the regulatory process. So with respect to reSET-O, reSET-O kind of I believe 510(k)'d off of reset. But reSET-O is functionally a combination product. So the combination -- the digital therapeutic in combo with the drug, the general concept is out there. Obviously, combination products where the other -- basically hardware and drug, that concept is already out there. So I think, overall, the elements have already been through the regulatory process.

We have not had a specific discussion with the FDA around this. We will do so as we go through the IND process with our assets. But, again, I think the general concepts have already been validated from a regulatory perspective. The EMA seems to be a little bit further behind on some of this. It doesn't immediately impact us, however, as we go through the process. And, of course, we get a chance to educate along the way and, of course, there's other companies that are thinking about general concepts like this. It should also be noted that ABILIFY MYCITE did go through the FDA approval process. It's a little bit different. MYCITE is hardware -- partially hardware-based, and it wasn't a digital therapeutic in the traditional sense. It was really more compliance management. But nonetheless, its concept of a digital element being paired with a drug rather is certainly out there. So all the pieces are out already. Does that answer your question?

Yes.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to Florian Brand for closing remarks.

Thank you, operator, and thank you, everyone so much for joining us today. It has been a pleasure to share our latest highlights and traction, as always, including the importance of the highly encouraging COMP360 data, as we've discussed, and its broader potential for psychedelics and mental health as a whole. We continue our onward positive momentum, progressing our diverse array of treatments, supported by our novel digital therapeutics and data insights that we also could discuss today. And, in addition, also discussed we will remain highly active in business development across a broad array of treatments-enabling technologies, understanding that when it comes to mental health, we are facing a very heterogeneous patient population and one size does not fit all. So we are driving treatment approaches with a very patient-centric focus as we advance our vision to heal mental health.

With that, I thank you all very much for dialing in today and have a great week.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.