Compass Pathways PLC (CMPS) 2021 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the COMPASS Pathways First Quarter 2021 Conference Call. (Operator Instructions). As a reminder, this call is being recorded.

I would now Like to introduce your host for today's conference, Stephen Schultz, Senior Vice President of Investor Relations. You may begin.

Thank you, operator, and welcome all of you, and thank you for joining us today for our first quarter 2021 results call. Again, my name is Steve Schultz, Senior Vice President of Investor Relations at COMPASS Pathways. And today, I'm joined by George Goldsmith, Chairman and Chief Executive Officer; and Piers Morgan, Chief Financial Officer. George will begin today's call with a business update on our recent progress. And Piers will follow with a review of our financial results. We will then open the call to questions. The call is being recorded and will be available on the COMPASS Pathways Investor Relations website shortly after the conclusion of the call. We hope you've had a chance to review our results press release issued earlier today.

Before we begin, let me remind everyone that during the call today, the team will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. The forward-looking statements on this call are neither promises nor guarantees, and you should not place undue reliance on these forward-looking statements, because they involve known and unknown risks and uncertainties, many of which are beyond COMPASS's control. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those risks and uncertainties described under the heading Risk Factors in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 9, and in subsequent filings made by COMPASS with the SEC. Additionally, these forward-looking statements represent our views only as of today and should not be relied on as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statement.

I will now hand the call over to our Chairman and CEO, George Goldsmith.

Thank you, Steve, and welcome, everyone. Over this past quarter, we have continued to make good progress towards our goal of accelerating patient access to evidence-based innovation in mental health care to enable people to live happier and healthier lives. To achieve this mission takes leadership. And to us, this means building and executing in a number of critical areas, which include late-stage clinical development programs, robust IP, a broad pipeline, active discussions with regulators and payers, digital capabilities to enhance the patient experience, and an experienced and expert team.

Let me go into more detail on each of these. Our Phase IIb trial of COMP360 psilocybin therapy for treatment-resistant depression, or TRD, for 216 patients is as far as we know, the largest clinical trial to date in psilocybin therapy. Trial recruitment is approaching completion, and we are on track to report top line data by the end of the year. We're already working with regulators to design our Phase III plan and expect to move rapidly into that phase pending the results of our Phase IIb trial.

Earlier this quarter, we received 2 further U.S. patent grants covering a composition of matter for the polymorph used in our high-purity crystalline COMP360 psilocybin and methods of treating major depressive disorder, or MDD, with this formulation and oral dosage forms of crystalline psilocybin and methods of treating MDD.

Our innovation now has been recognized with 6 granted patents, including 3 in the United States, 2 in the U.K. and 1 in Germany. We also have a number of active patent applications covering our drug substances and how they are used for the treatment of a range of psychiatric and neurological conditions, including TRD and MDD.

Last month, data from an independent investigator-initiated study using COMP360, was published in the New England Journal of Medicine. This is the first of a number of investigator-initiated studies using COMP360 to report data, and was an exploratory study designed and conducted by a research team at Imperial College London. The study aim was to compare the efficacy and mechanisms of action of psilocybin with a 6-week course of the SSRI escitalopram for MDD. The study showed signals of positive activity in COMP360 psilocybin when compared with escitalopram, and concluded that psilocybin findings should be explored further in larger studies.

The Imperial College study is 1 of many signal-generating studies that COMPASS is supporting with COMP360 psilocybin in indication areas of unmet need, including anorexia, autism, bipolar type 2 disorder, body dysmorphic disorder, chronic cluster headache, depression in cancer, MDD, severe TRD and suicidal ideation. These investigator-initiated studies may provide signals that we can explore further and move quickly into our clinical development program.

Our preclinical program is also progressing well, with more than 20 studies completed last year and 23 new studies currently underway. Our discovery center, led by Dr. Jason Wallach at the University of the Sciences in Philadelphia, is continuing to expand and is researching new optimized psychedelic compounds targeting the 5-HT2A receptor, a receptor in the brain that has been implicated in mental health illnesses. COMPASS will be the exclusive licensee for all new compounds generated. This work is in its early stages, but we believe it will enable us to broaden our portfolio beyond psilocybin therapy. In late April, we priced a financing. This funding gives us additional resources needed to accelerate and enlarge these research efforts. On behalf of the entire COMPASS Pathways team, I want to thank and welcome our new investors who have joined us on this journey.

The COMPASS team continues to grow as we build on our leadership position. We are rapidly building a team of digital experts who are researching and developing technology applications to improve the safety, efficacy and accessibility of our therapies. We believe these technologies will enable us to deliver therapy at scale, and to provide personalized care pathways in mental health that could help predict and prevent deterioration and relapse.

This quarter, we welcomed Dr. Wayne J. Riley to our Board of Directors. A primary care physician and an academic, Wayne has more than 25 years of experience encompassing clinical and academic medicine and has dedicated his career to patients and to improving health care services. Wayne is currently President of the State University of New York Downstate Health Sciences University Brooklyn. He also serves as Chairman of the Board of the New York Academy of Medicine, an elected member of the U.S. National Academy of Medicine, a Commissioner of the U.S. Medicare Payment Advisory Commission and President of the Society of Medical Administrators. He is a President Emeritus of the American College of Physicians and a member of the Board of Directors of HCA Healthcare. We are thrilled to have Wayne on our Board and look forward to benefiting from his breadth of experience. We're also delighted to welcome Anne Benedict as our Chief People Officer. Anne brings more than 25 years of global experience in human resources, talent and organizational development.

With that, I will now hand over to Piers, who will give you an update of our financial results for the quarter. Piers?

Thank you, George. The company continues to maintain a strong financial position, with cash and cash equivalents of $179.5 million at March 31, 2021, compared with $190.3 million at December 31, 2020. We also recently raised an additional $144 million before underwriter fees and expenses. This is expected to fund operations through the end of 2023.

I will now recap our financial results for the 3 months ended March 31, 2021. The loss from operations for the 3 months ended March 31, 2021 amounted to $13.6 million compared with $8.7 million for the prior year period. The loss from operations included noncash share-based compensation expense of $1.7 million for the 3 months ended March 31, 2021, compared with $1.8 million noncash share-based compensation in the prior period.

Research and development expenses for the first quarter 2021 amounted to $6.9 million, an increase of $1.7 million compared with the first quarter of 2020. This increase in research and development expenses compared with the prior year period was primarily attributable to, one, an increase of $0.6 million in development expenses, which primarily relates to an increase of $1.0 million in clinical trial expenses, offset by a decrease of $0.4 million in preclinical studies supporting our investigational COMP360 psilocybin therapy development. Two, an increase of $0.8 million in personnel expenses, mainly in digital and clinical activities. Three, a decrease of $0.1 million in noncash share-based compensation. And four, an increase of $0.4 million in other expenses, which was primarily related to increases in consulting and regulatory compliance expenses.

General and administrative expenses were $6.7 million for the first quarter of 2021 compared with $3.5 million for the same period in 2020. The increase in general and administrative expenses compared with the prior year was primarily attributable to: firstly, an increase of $1.4 million in personnel costs, primarily additional personnel in general, administrative and commercial functions to support our growth initiatives, including our transition to a public company. Secondly, an increase of $0.1 million in noncash share-based compensation. Thirdly, an increase of $0.6 million in legal and professional fees primarily related to expenses associated with operating as a public company; and fourthly, an increase of $1.1 million in facilities and other expenses, including rent, depreciation and insurance.

Other income for the first quarter of 2021 amounted to $0.9 million compared with other income of $0.1 million for the corresponding period in 2020. The increase in other income amounting to $0.8 million compared with the prior year was primarily attributable to: firstly, a net movement of minus $0.7 million in foreign exchange arising from a loss on foreign exchange of $0.6 million in the first quarter of 2021 compared with a gain on foreign exchange of $0.1 million in the first quarter of 2020. Secondly, a net movement of plus $1.0 million on the fair value of convertible notes, reflecting an amount of [nil] dollars in the first quarter of 2021 compared with a loss of $1.0 million in the corresponding period of 2020. And thirdly, an increase of $0.5 million in other expenses, which was primarily related to an increase in the benefit from R&D tax credit of $0.5 million to $1.6 million compared with $1.1 million in the first quarter of 2020. The net loss was $12.7 million or $0.35 loss per share for the first quarter of 2021 compared with a net loss of $8.6 million or $0.93 loss per share during the same period in 2020.

And with that, I hand you back to George.

Thank you, Piers. We believe that our progress over the last few months reflect our leadership position in advancing evidence-based therapies for mental health care. We have the resources to move even faster, and we intend to accelerate our preclinical research programs of novel psychedelic compounds to expand our clinical development program for COMP360 psilocybin therapy into new indications and to continue to develop our digital solutions to improve patient experience. We look forward to reporting on these and other initiatives in the months ahead. Thank you for your time today and for your interest in COMPASS.

With that, we will now open the line for questions. Operator?

(Operator Instructions). Our first question comes from Josh Schimmer with Evercore ISI.

Starting to see a number of other psychedelic drug development companies emerging, and I think it's maybe a good time to come back and maybe refresh for us, what makes COMPASS unique in this field? And how do you plan on retaining your first-mover advantage?

Thanks, Josh. Appreciate it. I think our key differentiators are the things that we started today's discussion with. We have a late-stage program. We have robust IP. We have team expertise across all the disciplines required not only to develop this as a medicine, but also to make it available and accessible to patients regardless of their ability to pay. We have strong relationships with regulators and have been working with them since actually before the beginning of the company as well as payers, to make sure that our research was generating the evidence because we are an evidence-based company. And I think really looking strongly at innovative care delivery models and centers of excellence, and we've announced those in the past, and we'll continue to make progress in that area. And that includes the integration of therapy technology in medicine because we are a 21st century company. Additionally, we have pipeline now with additional indications and additional substances that are in the discovery center. And I think most importantly, given the financial fundraising we did, we're very well funded. And I think that gives us the ability to execute, as we've demonstrated we can, on all of those items I just mentioned. I hope that's helpful.

It is. Do you ultimately expect psychedelic centers to be a fragmented group or a more consolidated group of entities, like we might see in the dialysis setting?

I think given the scope of the unmet need relative to dialysis, we'd expect to see it as a more diverse group. And our goal is to work with many different types of those in the future.

Our next question comes from Charles Duncan with Cantor Fitzgerald.

George and team, congrats on the good progress. I had 1 that was kind of a prospective builder for me. I'm wondering if you could -- you mentioned the Imperial College work. And recently, the New England Journal of Medicine article. And I'm just wondering if you could share more perspectives on the takeaways that you came away from in terms of not only trial conduct and design, but also the data from that trial, and whether or not it impacts your strategy in any way. What were the learnings for you?

Great, Chaz, thanks so much. And I think this was a, first of all an independent investigator-initiated trial. So we didn't have anything to do with the design, but we really believed strongly in the team and how they approach things. I think for us, the -- we found this to be encouraging data. It continues the trend that we've seen in other studies that have been investigator-initiated trials in patients suffering with depression. And it shows promising signals for psilocybin relative even to the leading SSRI escitalopram. Now of course, the trial wasn't fully powered to detect that. So we have to keep a lot of those different things in mind, that there are quite a number of differences between that and our Phase II trial, it's including a different patient population. This was -- our trial is focused on referral by physicians, verified 2 to 4 medication failures. So there are quite a number of things, our endpoints are different. They use QIDS, we use MADRS. But I think that what did come out of this trial was that we saw a immediate and durable decline in depression symptoms for those people having a 25-milligram dose. And that's the same pattern that we've seen in others. Now obviously, this trial did have 2 doses, our Phase IIb trial has a single dose. But when we look at what happened in the trial in the New England Journal and the results, we see that there was a durable impact to the -- right before the third -- the second dose of 3 weeks. So that gave us -- we're encouraged around the design. I think that we -- in terms of our approach, we stay committed to our focus on TRD as a place to start, but we'll be looking at other forms of perhaps difficult-to-treat depression as we move forward. And so I think that, that's kind of the core. I don't know if there are additional follow-ups, maybe you'd like to ask.

No. No, that's very good, helpful, George. So a signal-seeking study that provided a good signal. I guess I'm wondering then, as you think about the Phase IIb you actually mentioned working to design a Phase III, and I know this is a little premature to ask about what that design would be. But I guess I'm wondering if you think you'll be in a position to operationalize a Phase III within a reasonable time frame in '22, say, by midyear or around that time, assuming that the data are clear out of the Phase IIb.

I think that's a really great question. So as you know, our mission is to accelerate patient access to evidence-based innovation. So that accelerate means a lot to us, and we tend to do things concurrently and do a lot of forward planning. So we have already discussed Phase III programs with contingencies, obviously, depending on what we would see with regulators. Our goal is very much to be in Phase III as quickly as possible. And part of that means our whole team is very focused on all the bits required for an end of Phase II meeting with the FDA, and then similar approaches in other countries. So I think that we're all about moving as quickly as possible. Obviously, the results from our Phase IIb trial are critically important to inform the design, but we've tried to anticipate those and have a variety of scenarios ready to go when the time is right. So I think we just continues with our ability to execute more closely with regulators and do that as early as possible.

By the way, we also include payers in that because, as you know, we feel strongly that our regulatory approval is simply seeing the starting line, that we really need to be understanding how to make this accessible to patients in the best way possible. And so even looking at the health economic requirements in our Phase III trial, as we have in Phase II, is really a critical differentiator for us. It may touch back on Josh's question as well.

Very good. I like it. Accelerators. Thanks for the added color, George.

Our next question comes from Ritu Baral with Cowen.

I wanted to just start by asking about the ongoing conduct of the Phase IIb. Can you talk about how dropouts have been going and the interim safety looks? And if there's any safety observations that you've seen to date? And I've got a follow-up.

Sure. So we don't disclose dropouts and so forth. So we haven't disclosed that, but the study has been proceeding as well as we would ever have imagined, so I'll just leave it at that. We're very happy with the progress that we've made and hold to our end of year reporting time-out. I think that 1 of the -- for the data of the top line data. I think what we have seen for SUSARs in this trial, as we have disclosed, when we look at this population, sadly those things are to be expected. And we are -- they're well within our expectation. There's never been any requirement by our DSMB or regulators to make any changes to our protocol from them. It's just part of why we're doing this work is to address the huge unmet need here of the suffering. So we have had nothing unexpected for this population emerge in our reviews of any safety going forward. Did that answer your first question, Ritu?

Yes. So I wanted to also ask about some of the digital health management initiatives that you're developing as wraparound, I guess, measures and care for TRD and potentially MDD. Are there any that have been implemented in the Phase IIb that we will hear about when you top line data? Or is this something that's going to be reserved for Phase III?

As we've disclosed in the past, we did have a partner -- do have a partnership with Mindstrong, and a small portion of our patients in English-speaking territories using Android have provided data. So that will be part of our exploratory package in Phase IIb. And we have, as we've also disclosed, been able to have some of the people working on that team. They've joined our company, and we will be continuing and pursuing those types of exploratory endpoints. I think, as you know, many of the endpoints that are currently being used are paper - pencil, developed in the 70s and 80s. And I think there is a broad opportunity to look at developing new types of measures here in the 21st century. We're focusing on that. And obviously, we'll be developing that and disclosing more as we make more progress.

Got it. And 1 last question, if I can squeeze it in. You mentioned -- George, you mentioned a lot of the patent filings as well as issued patents. And you outlined, I believe, polymorph, composition there around polymorph, method of use for the polymorph and then other methods. Can you give us, even if it's only high level, just a little more detail around the strategy behind the other methods portion of that comment?

When you say other methods, do you have specific things that you are inquiring about?

Specifically, potentially, I guess, disease states, whether it's TRD, MDD and beyond for the polymorph or the strategy around, I guess, the wraparound psychological support.

Sure. I think a couple of things. So probably 3 things. The first is that what we're doing is we have a very robust set of Phase I studies, preclinical work and then moving into Phase I. We obviously are looking to address areas of high unmet need beyond TRD and MDD, as we've spoken. So everything that we're doing is looking at how do we move forward in a way that will provide confidence to investors in that area -- in those areas. In terms of our focus on the specific polymorph and its application, we have been, again, really looking at how do we protect that which we've developed. And I think that's been an important aspect of everything we've done. And when we talk about things like the therapeutic wraparound, I think there's been so much important work done over the years demonstrating the importance of that, that absolutely has to become part of our focus, to make sure that this is always done in integration of the support for patients as well as the molecule. And so that's been a really important aspect of this, particularly as we look forward into -- as our life cycle matures to make sure that those things are always connected for patient safety and outcome. But I also want to make very clear for the record, there's been some comments. We're not attempting in any way to patent room decor, soft furniture, listening to music or any of these individual items that have been pulled out of context from our patent applications and some social media commentary. So this is just the way a syringe would be addressed in a chemotherapy patent and so forth. So I just want to be clear about that. And I do see your question as an opportunity to clarify that, so thank you, Ritu. Did that answer your question?

Got it. Yes.

Our next question comes from Sumant Kulkarni with Canaccord.

I have a few here. So first one, you mentioned that you've already engaged with regulators and potential next steps. Does this include the FDA? And could you share any early findings on anything that's specifically new, interesting or different in the way these regulators might be thinking about COMP360's trial designs relative to your ongoing Phase IIb?

So we are -- we have breakthrough therapy designation. As you know, and we seek to engage with regulators in a way where they can add value to our program. And those conversations continue. Those meetings continue. So from my perspective, there's nothing additional to share until we have the results. I think that the conversations with payers and with regulators everywhere we go are constructive. Obviously, they're quite aware of the huge unmet need. And they see they're looking for how to accelerate patient access to anything that might help in these areas.

Got it. Given the potentially long duration of action of psilocybin, is there some sort of statutory limitations beyond which adverse events may not be considered product-related? And on that note, as the COMP360 program evolves, what are your latest thoughts on forward integration into the clinics to have more control over the way that COMP360 may be administered?

So regarding the first question, I think it's a really interesting one. It's 1 we wrestle with, and we'll be discussing with regulators, obviously, given long term durability. And we've even seen that in some of our trials. People have life situations and so forth, it could be weeks after, then do you attribute that to [them], and so this is -- to the actual psilocybin or not. So this is a new area, given long durability from a single trial and one that we'll certainly be discussing. But I won't say there's any kind of definitive answer on that at this point. And I think related to your second question, I'm sorry, Sumant.

So it was on forward integration into clinic.

I think that we're working very much on how that could work, how to have -- make sure it's reimbursed. So that's activity that's continuing to go on. And obviously, the closer we get when we look at our Phase III infrastructure, our Phase III sites, we're going to want to make sure that whatever we're doing there is a very, very smooth glide path to broad implementation.

Okay. And my last question is a specific 1 on chemistry and intellectual property. Is it even possible to synthesize any formulations of psilocybin that do not include your polymorph? And would they have pharmaceutical activity?

I can't answer that question, let me say, again, it's -- would be speculative on my part, and I'm not a chemist. So we're confident in the work that we've done for protecting our polymorph, but I can't comment on what others might do or be able to do.

Our next question comes from Esther Hong with Berenberg.

I've got 2 questions. So first, I wanted to dig deeper into the number of doses administered in the ongoing Phase IIb study, versus academic studies. So can you provide more details on the decision to move forward with a single dose versus 2 doses, which are administered in some of the IIS studies, and understanding that COMPASS did not design those academic studies? And then I've got a follow-up.

Sure, Esther. Thank you for separating the questions. So this first question is really, if you go back to our mission, it's to accelerate evidence-based innovation and to work closely with regulators and payers in order to get this to patients. So using that as a theme, there were some really core unanswered questions that need to be answered in order to really focus on getting this to patients. One of them, what is the dose? And the second is how do [our group perform]. And because we saw this huge -- in all the prior studies, we've seen really high variability. And some people go for months and even longer, they report, from a single dose. Other people don't respond. Other people have intermediate responses. It's our obligation in I think doing socially responsible development, to make sure that we understand who benefits and then how long they benefit. And so without doing a single dose and then tracking people over time, there's no way to answer that fundamental question so that we can be good stewards of health [and so] resources. So we chose to do that. Obviously, the investigators are exploring this in ways that will add to our future and other futures of other companies working in this area. So it's good that they explore. But for us, as we bring this to patients, this is really our responsibility.

Great. Got it. And then the next question is also on patents. So the company has now 6 granted patents in the U.S. including a recently granted 1 on an oral dosage form of psilocybin. So I was wondering what indication this form could best be used?

Sure. So we are exploring a variety of different indications and ways of administering psilocybin. And so this is just to protect that area of investigation as we go into other indications that we've disclosed in our plans, things that we're looking at in terms of difficult-to-treat MDD, PTSD, et cetera. So this just helps protect those areas for us.

And there's no other questions in the queue. I'd like to turn the call back to management for closing remarks.

Thank you very much. We're really grateful for the support among our investors and our analysts. We are working hard to bring this to patients as soon as possible. It's very clear that post COVID, these issues are becoming, in mental health and mental health suffering, even more pronounced. And we retain our commitment to accelerate patient access to evidence-based innovation in order to help people live happier and healthier lives. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.