Mind Medicine (MindMed) Inc (MNMD) 2023 Q2 法說會逐字稿

Good afternoon, and welcome to Mind Medicine second-quarter 2023 financial results and corporate update conference call. (Operator Instructions) This call is being webcast live on the Investors and Media section of MindMed's website at mindmed.co, and a recording will be available after the call.

For opening remarks, I would like to introduce Rob Barrow, CEO of MindMed. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to our second-quarter 2023 financial results and corporate update conference call.

The press release reporting our financial results is available in the Investors and Media section of our website. And our quarterly report on Form 10-Q for the quarter ended June 30, 2023, will be filed today with the Securities and Exchange Commission. Joining me today is Schond Greenway, our Chief Financial Officer; Dr. Dan Karlin, our Chief Medical Officer; and Dr. Miri Halperin Wernli, our Executive President.

During today's call, we will be making certain forward-looking statements including, without limitation, statements about the potential safety, efficacy, and regulatory and clinical progress of our product candidates, financial projections, and our future expectations, plans, partnerships, and prospects. These statements are subject to various risks such as changes in market conditions and difficulties associated with research and development and regulatory approval processes that are described in the filings made with the SEC, including the most recent annual report on Form 10-K and quarterly report on Form 10-Q.

Forward-looking statements are based on the assumptions, opinions, and estimates of management at the date the statements are made, including the non-occurrence of the risks and uncertainties that are described in the filings made with the SEC or other significant events occurring outside of MindMed's normal course of business.

You are caution not to place undue reliance on these forward-looking statements, which are made as of today, August 3, 2023. MindMed disclaims any obligation to update such statements, even if management's views change, except as required by law.

We are very excited to be providing this financial and business update as we rapidly approach an exciting and critical period for MindMed. Over the past year, we have made significant progress on our R&D pipeline which has positioned us for a series of important milestones in the coming quarters.

Our most advanced lead program, MM-120, for generalized anxiety disorder or GAD has seen extraordinary enthusiasm and execution over the past 12 months. In August 2022, we dosed the first patient in our Phase 2b study of MM-120 for GAD. And with the significant momentum we have achieved, we are on track to complete enrollment and patient dosing by the end of the third quarter, with top-line data on the primary endpoint through week four to be reported in the fourth quarter of this year.

It is worth a moment of reflection on the significance of this upcoming milestone, given the historical importance and compelling opportunity for lysergide or LSD. LSD is the most studied, storied, and perhaps, the most stigmatized drug in the psychedelic class. And it is our aim that with compelling clinical data from our Phase 2b study, our proprietary form of LSD, MM-120, will become one of the leading candidates, if not the leading candidate, in the psychedelic drug class.

Before we dive further into our R&D and financial updates, I would like to highlight the current backdrop of brain health disorders, which has experienced increased visibility due to worsening epidemiology and recognition of its significance on overall well-being, with a particular appreciation for the breadth and magnitude of impact that anxiety plays in driving brain health disorders.

We've been heartened by the recent comments from the President regarding the need to improve access to mental healthcare and remain supportive of broad and concrete steps to do just that. Given that the annual healthcare costs for people with a behavioral health condition are 3.5 times higher than for those without a behavioral health condition, the need for better access to mental healthcare is clear.

We believe the re-emerging potential of LSD as a pharmaceutical candidate is also mirrored by the growing appreciation for the core nature of anxiety and psychiatric disorders, including GAD in particular. GAD is an often-debilitating mental health disorder associated with excessive anxiety and persistent worry, which can lead to significant impairment, including less accomplishment at work and reduced labor force participation, as well as significantly higher rates of other comorbid conditions.

And unfortunately, the problem has grown significantly over the past several years. A recent mental health prevalence study that was prepared for the Substance Abuse and Mental Health Services Administration or SAMHSA found that 10% of US adults report having generalized anxiety disorder diagnosis, making it the second most common mental health disorder among adults.

In comparison to historical studies of the prevalence of GAD, the condition appears to have tripled in the last two decades alone. This reality is reinforced by the recent emphasis on anxiety screening, as last year, the US Preventative Services Task Force or USPSTF issued a recommendation to screen for anxiety all children and adolescents aged 8 to 18 years and issued a draft recommendation to screen all adults under the age of 65.

This growth in prevalence and focus of anxiety disorders has unfortunately not been matched by innovative treatments, with the treatment landscape remaining dominated by SSRIs, SNRIs, benzodiazepines, and in more limited cases, antipsychotics. In fact, the last original approved marketing application that was focused on the treatment of GAD was obtained for Cymbalta in 2004.

And despite their broad use, which represents approximately $3 billion in annual US revenues, available therapies suffer from a variety of efficacy, safety, and tolerability challenges that lead to low rates of compliance and remission. The simple reality is that for many years, GAD has been an overlooked indication, precisely because the most used treatment options, such as SSRIs, appear to be less well-equipped to treat anxiety symptoms than depression symptoms.

This presents both in the relatively lower response to SSRIs in GAD versus MDD, but also in the fact that MDD patients with heightened anxiety typically respond less well to current standards of care. Quantitatively, this is displayed by the fact that current therapies for GAD have demonstrated a standardized effect size of around 0.4 in clinical trials, with some demonstrating a considerably lower response.

The research we have conducted with patients and healthcare practitioners in the US and Europe tells us that there is a significant demand for a new pharmacological class that could offer faster, more profound, and more durable efficacy responses, as well as favorable safety and tolerability. This is particularly true in the segment of patients who, despite having tried currently available therapies, continue to experience intolerable anxiety.

We believe this is a major contributor to the high degree of enthusiasm we consistently hear from patients, providers, and payers on the revolutionary potential of MM-120 in psychiatric disorders. As one prominent psychiatrist recently put it, the days of SSRIs and the like are limited.

On a related note, in June, FDA released draft guidance for developing drugs in the psychedelic drug class. Notably, this guidance highlights the reality that dose response is not well understood for the drug class and emphasizes the need for elucidation of dose-response relationships exactly as we are doing. The draft guidance also notes the importance of establishing a standalone drug effect that is in the absence of psychotherapy, which is exactly as we designed our clinical trial over two years ago.

In our view, our approach is clearly in line with the FDA guidance and, importantly, allows for consistent study design and treatment delivery paradigm as we potentially advance into pivotal clinical trials. To our knowledge, our Phase 2b study of MM-120 in GAD is the largest controlled study of LSD ever conducted and will guide the dose selection and development strategy for MM-120 in GAD, as well as deepen our scientific understanding of its clinical effects and its underlying functional mechanisms of action.

It's important to point out that we dosed our first patient just under one year ago in August of 2022, with activation of all of our clinical sites only occurring at the beginning of 2023. The ability of our team to execute a study of this size so seamlessly and efficiently stands out within the field and also speaks to the quality of the organization we have built with MindMed.

It also reinforces our high degree of confidence in our team's ability to launch and enroll future studies in a very efficient manner. Patient dosing and enrollment for our Phase 2b trial in GAD is progressing well across our 20 active sites. And we expect to complete study enrollment in the third quarter of this year, with top-line results to be reported in the fourth quarter of this year.

Patients in the trial are randomly assigned to receive a single administration of either 25, 50, 100, or 200 micrograms of MM-120 or a placebo, and are then followed for up to 12 weeks. The primary objective of the study is to determine the dose-response relationship of MM-120 across the four active dose arms, as measured by the change in Hamilton Anxiety Rating Scale or HAM-A at four weeks post dosing.

The statistical analysis being employed in the study is a multiple comparison procedure modeling or MCP-Mod approach, a sophisticated statistical approach developed by Novartis, which is especially well-equipped to demonstrate dose response and optimize dose selection. This statistical approach, which has received qualification opinions from both FDA and EMA, has superior power and lower estimation errors compared to more traditional designs, which we believe bolsters the probability of success of our approach.

As we finalized the statistical analysis plan for our Phase 2b study, we have also made the determination that due to the high powering of our approach, a reduction in the minimum sample size is warranted. And as a result, we are reducing the enrollment target by 10% from 200 patients to 180 patients.

We believe this change maintains a statistical power of approximately 90% to achieve the study's objectives. And based on our internal modeling, this is a high degree of confidence in obtaining statistically positive results if we observe an effect size that represents even a marginal improvement over the standard of care.

As we rapidly approach conclusion of our Phase 2b study, we are also excited to share our plans for the ultimate formulation we intend to advance for our MM-120 product candidate, specifically utilizing Catalent's Zydis ODT technology as we announced earlier today.

Over the past years, we explored numerous advanced dosage forms, with the aim of enhancing pharmaceutical performance and intellectual property protection, creating a product that is difficult to replicate and has the opportunity to demonstrate more attractive pharmacokinetic performance characteristics, such as faster absorption, better bioavailability, reduced variability, and as a result, the potential for reduced duration of perceptual activity.

Toward this end, we entered into an exclusive license agreement with Catalent that covers all forms of LSD across all major pharmaceutical markets. Catalent is a global leader in enabling biopharma, cell, gene, and consumer health partners to optimize development, launch, and supply of better patient treatments across multiple modalities.

With our agreement, MindMed has gained access to Catalent's patented Zydis orally disintegrating tablet or ODT technology for use with MM-120. Catalent's proprietary Zydis technology is a unique, freeze-dried oral solid dosage form that disperses almost instantly in the mouth without the need for water.

We believe that the Zydis ODT delivery technology, when incorporated into our MM-120 product candidate, represents an optimized pharmaceutical product that has the potential to enhance our competitive advantage in the marketplace and continue to expand our intellectual property or estate, with the first relevant patent application not expiring until 2042, assuming our patent application claims are issued and granted.

To further support this transition, we are also planning to initiate a Phase 1 pharmacokinetics bridging study to support the advancement of MM-120 ODT into pivotal clinical trials. We believe this will allow for precise dose selection for Phase 3 and provide invaluable data to bolster our intellectual property position. Additionally, we have either completed or are in advanced planning to complete all prerequisite studies that we believe will enable an efficient transition from the conclusion of our Phase 2 clinical program into pivotal Phase 3 studies.

In addition to the session-based delivery of MM-120 in GAD, we are investigating the direct neuropharmacological activity of MM-120 as a serotonin agonist and innovative treatment regimen. One such exploratory approach is our Phase 2 proof-of-concept study of MM-120 for ADHD.

This study is being conducted in collaboration with University Hospital Basel in Switzerland and Maastricht University in the Netherlands, and is designed to evaluate the therapeutic utility of repeated low doses of MM-120 in adult patients with ADHD. Notably, this is the first study in which MM-120 has been administered outside of a clinical setting. To date, no SAEs have been reported, suggesting the real-world potential of this treatment regimen, as well as demonstrating our ability to deliver MM-120 with innovative dose and frequency combinations.

We expect to enroll a total of 52 participants who will receive a 20-microgram dose of MM-120 or placebo twice weekly for six weeks, with the primary import for this study being the mean change from baseline in ADHD symptoms as assessed by the AISRS after six weeks of treatment. Enrollment in the study has continued to progress with over 80% of enrollment complete. However, due to controlled substance importation challenges at our Netherlands site, we now anticipate reporting top-line results in either the fourth quarter of 2023 or the first quarter of 2024.

Our second lead program is MM-402, which is the R-enantiomer of MDMA. We believe MM-402 holds promise for its potential prosocial effects and favorable tolerability profile versus racemic MDMA. The focus of MM-402's development is to develop a regularly administered product that treats the core symptoms of autism spectrum disorder or ASD, in particular social communication difficulties.

Remarkably, despite the significant and increasing prevalence of ASD, there are currently no approved therapies specifically targeted at its core symptoms. MDMA, often referred to as an empathogen, is a synthetic molecule known to enhance feelings of connectedness and compassion. The R-enantiomer of MDMA, in particular, is believed to boost serotonin and other neurotransmitter levels in the brain, leading to increased sociability and interpersonal emotional warmth.

Preclinical studies of R-MDMA have shown acute prosocial and empathogenic effects, while its reduced dopaminergic activity suggests it might exhibit fewer stimulant, neurotoxic, hyperthermic, and abuse-related effects compared to racemic MDMA or the S-enantiomer. With robust preclinical evidence supporting our approach, we are excited to launch the Phase 1 clinical trial of MM-402 later this year.

This trial aims to assess MM-402's tolerability, pharmacokinetics, and pharmacodynamics. And we are actively exploring all possibilities to generate early indications of efficacy during development. We expect to gather such data both from neurotypical healthy volunteers and otherwise healthy individuals diagnosed with ASD.

Currently, we have collaborated with University Hospital Basel to conduct a comparative Phase 1 pharmacokinetics and pharmacodynamics study of R-, S-, and racemic MDMA. This study involves enrolling healthy volunteers and is designed to evaluate the tolerability, pharmacokinetics, and acute subjective, physiological, and endocrine effects of the three molecules.

Successful completion of this study is expected to expedite our understanding of MM-402's pharmacological profile as we progress into later-stage clinical development. We've been informed by UHB that they anticipate completing enrollment by the fourth quarter of this year and anticipate that data will be presented in the first half of 2024.

Next, I would like to turn to our digital medicine updates. Alongside our drug development strategy, we have a suite of digital medicine programs that hold the potential to enhance the adoption, utilization, and accessibility of our drug product candidates. As we look at the potential commercial challenges, which are especially important with our product candidates being developed for session-based delivery, we believe our integrated digital applications can significantly contribute to overcoming potential barriers and position our product candidates as ones with the most efficient delivery throughout the patient journey.

Similar strategies have been successfully utilized to great success for other groundbreaking therapies, effectively overcoming similar barriers to deliver and enhance efficiency and ease of delivery. This differentiating factor could also afford us even further market protection, making our alternate products extremely difficult to replicate while maintaining the same degree of safety, effectiveness, and ease of delivery should they ultimately be approved and marketed together.

Over the course of 2023, we have seen significant progress in advancing our digital medicine programs and have successfully integrated these digital applications into certain ongoing and planned clinical studies. Our specific approach targets two primary clinical periods: activities during a treatment session or intra-session and activities between treatment sessions or inter-session.

Each approach is built on a platform comprising distinct components, with some falling under the purview of the FDA's definition of medical devices, while others may not be regulated as such. For those that qualify as medical devices, we intend to collaborate with the FDA and other international regulatory authorities to seek guidance throughout the development process, with the goal of ultimately obtaining regulatory clearance or approval.

To date, we have significantly advanced the technical, clinical, and regulatory execution of our intra-session monitoring application, the MindMed Session Monitoring System or MSMS. Through multiple meetings with FDA, including representatives of both the FDA's Center for Devices and Radiological Health or CDRH, and with the Division of Psychiatry within CDER, we believe we have charted a course with the intent to further the integration into our clinical development program for MM-120, with an aim to ultimately obtaining approval for the integrated solution.

The path to achieving this objective uses well-established device regulatory pathways in an efficient and unique manner. Specifically, we are leveraging a development pathway in which a version of MSMS designed specifically for use by providers and patients during a Spravato nasal spray treatment session, is being advanced in pursuit of a Class 2 regulated software as a medical device or SaMD clearance via the de novo pathway.

In pursuing this CDRH clearance, we are seeking to build a product that we believe will be a useful asset in supporting the safe administration of Spravato and a release from the clinic of patients undergoing Spravato treatment. We are also seeking to establish with FDA that the components of our product meet their requirements for labeling.

We believe this initial approach to obtain early FDA clearance for MSMS with Spravato paves the way for a potential rapid regulatory application of a subsequent MSMS version designed for use with MM-120, subject to its potential future approval. To leverage the efficiency of this approach, as we pursue the de novo clearance for MSMS used in conjunction with Spravato, we are, in parallel, collecting data on MSMS used in conjunction with LSD from both clinical studies being conducted through our UHB collaboration, as well as studies that are part of our MM-120 development program.

This strategy opens the door to potential early clinical integration of MSMS as a companion device to MM-120 and the potential subsequent pursuit of a combination product label. Given the anticipated episodic nature of treatment of MM-120, in particular, we are also continuing to conduct clinical research with our digital medicine applications to allow for ongoing patient monitoring and engagement outside of a treatment session.

We aspire to have the integrated data from in-session monitoring with MSMS and out-of-session monitoring, allow for a deeper understanding and prediction of patterns of response to MM-120, and potential optimization of dosing paradigms on a more individualized basis.

Turning to our commercial initiatives, over the course of 2023, we have continued to attract strong commercial leaders who have successfully launched numerous products, including in complex and highly stigmatized settings. We are continuing to see great progress in these initiatives as we seek to develop a groundbreaking market access strategy, thoroughly document the clinical and socioeconomic impact of our target indications, and generate health economic and outcome research data to bolster the value proposition of our product candidates.

We recognize and embrace the challenges associated with potentially launching a new therapeutic class in a major market indication. We are also encouraged by the recent growth and uptake of Janssen's Spravato nasal spray, which similarly utilizes a session-based delivery paradigm.

The lack of a durable treatment response for Spravato requires patients to spend over 12 hours in a clinical setting across six or more visits in the first month of treatment alone. Even still, in the most recent quarters, Spravato sales grew by 99% year over year, with a greater than $675 million annual run rate.

In light of this increasing uptake and the demonstrated willingness of patients, providers, and payers to embrace an innovative intermittent treatment model, should we be successful in demonstrating the safety and effectiveness of MM-120, we believe MM-120 could represent an even more attractive treatment option with more durable and less administratively cumbersome delivery characteristics. As we continue to progress our pipeline, we remain committed to offering greater clarity on our planned commercial model and the path forward for each program, aiming to maximize the impact and uptake of our innovative product candidates.

With respect to our intellectual property and market protection strategies, our current patent portfolio includes 57 pending US applications and 19 pending Patent Cooperation Treaty applications. These include applications covering compositions, dosing, dosage formulations, and methods of treatment among others, with projected expiration dates beginning in 2041.

Our market protection strategy has been further strengthened by our recent exclusive license agreement covering use of the Catalent Zydis ODT technology for LSD in all its forms in all major pharmaceutical markets. We continue to retain all rights to our product candidates and are aggressively protecting and expanding our intellectual property portfolio as part of our comprehensive market protection strategy.

Over the course of the next several quarters, we anticipate several important intellectual property milestones that we believe will reinforce our optimism about our ability to durably protect our market position for many years. Overall, we are highly encouraged by the progress we have made at MindMed, and we are enthusiastic about the many exciting milestones in the months ahead.

We are deeply committed to advancing our organization and providing new life-changing treatment options for individuals suffering from brain health disorders. As we continue our strategy to bring our lead product candidates to market, we firmly believe that we are laying a strong foundation for creating enduring value for our shareholders.

With that, I'll turn the call over to our CFO, Schond Greenway, to discuss our financial results. Schond?

Thanks, Rob, and thank you, all, for joining us today. We will now turn to our financial results for the quarter ended June 30, 2023.

As of June 30, 2023, MindMed had cash and cash equivalents totaling $116.9 million, compared to $142.1 million as of December 31, 2022. We believe that our cash position allows us to accelerate our preparation for moving quickly into our pivotal program for our lead development candidate in MM-120 and will be sufficient to meet our operating requirements beyond our key development milestones in 2023 and into the first half of 2025.

The net cash used in operating activities was $27.2 million for the six months ended June 30, 2023, compared to $28 million in the first six months ended June 30, 2022. R&D expenses were $14.8 million for the quarter ended June 30, 2023, compared to $9.3 million for the same period in 2022, an increase of $5.4 million.

The increase was primarily due to increases of $4.4 million in expenses related to clinical research for our MM-120 GAD study, $0.8 million in preclinical activities, $0.6 million in internal personnel costs as a result of increasing R&D capacities, and $0.2 million in connection with various external R&D collaborations, partially offset by a decrease of $0.5 million in expenses related to our MM-110 program and a decrease of $0.1 million related to our MM-402 program.

General and administrative expenses were $14.4 million for the quarter ended June 30, 2023, compared to $7.6 million for the same period in 2022, an increase of $6.8 million. The increase was attributed to professional services fees and expenses related to our proxy contest in connection with our 2023 Annual General Meeting of Shareholders, and additional costs to support the growth of our business. Our net loss for the quarter ended June 30, 2023, was $29.1 million, compared to $17 million for the same period in 2022.

I will now turn the call back to Rob, who will provide some closing comments.

Thank you, Schond. As we come to a close, I want to extend my sincere appreciation and gratitude for the critical work and unmatched execution that has brought MindMed ever closer to realizing our mission.

I'd like to thank our highly talented and deeply committed team, our research collaborators and clinical investigator teams, our investors, and the many other individuals who have been supportive, including especially our patients and their families. We are working tirelessly to deliver on the therapeutic potential of our pipeline and transform the treatment landscape for many individuals living with brain health disorders.

With that, I'd like to thank you, all, again for joining us today. And I'm happy to take any questions.

(Operator Instructions) Charles Duncan, Cantor Fitzgerald.

Hi. Yeah. Rob and Schond, thanks for taking our questions. And congratulations on the GAD enrollment progress and the Zydis deal. That looks to be pretty interesting. I know other companies have been satisfied with working that technology.

I had just a couple of questions on the ongoing GAD study, and so we'll start with the four different dose levels and placebo. I guess, I'm wondering, what do you anticipate for the dose response?

And then secondarily, for moving forward, what is more important to you? Is it a certain P value, or is it responder rate for efficacy? I guess, given that this is not a pivotal study, I would anticipate that the totality of data is most important. But what are you looking for out of this study? And when?

Yeah. Thanks so much. Thanks so much, Charles. Thanks for the questions.

So first, in terms of what we're expecting across the dose levels, certainly, what we've seen from historical studies in healthy volunteers gives us some insight in terms of the acute pharmacodynamics of MM-120 or LSD. But very little -- and I think it was highlighted in FDA's recent guidance -- very little is actually known about the relative response to these different doses or really across a broad range with any of the psychedelic drugs.

And so we're going in -- part of the statistical methodology allows for the nomination of candidate response curves. Now, I think based on historical data where, particularly the data that came out of UHB last year, where we saw there was a degree of correlation between the magnitude of the acute perceptual effects and the ultimate clinical response in that study.

And I think we have an expectation that at higher dose levels in the range we're studying, we would see a more robust response. But, of course, the entire study is designed to ultimately elucidate what that response curve is.

And that translates nicely over into the second part of your question, in terms of what's most meaningful, what's most important moving forward. Certainly, as a dose optimization study, one of the key features is to identify a dose that we can transition into subsequent clinical research and get into pivotal studies.

And in connection with that, we're looking to also quantify the magnitude of the effect size at the different doses, but also at the dose we would ultimately then select to take forward. That, in terms of an outcome, is really key in understanding the magnitude of the effect that's going to, of course, drive the patient numbers and the powering of subsequent clinical studies.

And so, in that context, certainly, from a clinically relevant perspective, we would certainly want to see a response that is in line with or better than the current standards of care, as I mentioned earlier in the call, with generally an effect size of 0.4 or below. So something there or above would be certainly supportive of moving forward, in our view.

But, obviously, given the historical evidence and some of the preliminary studies of LSD, we think there's a really compelling opportunity. And if we see a higher effect size, it would be even more exciting about the opportunity forward. And of course, it would also imply either higher power or lower required patient numbers as we progress in plan.

That's helpful, Rob. If I could ask one additional follow-up question regarding the phenotype of the patient sample that you're enrolling. You have a pretty broad range: age range, 18 to 74.

I guess, I'm wondering what you think about that in terms of heterogeneity. I mean, some of those patients may have had general anxiety disorder for quite some time. Would you anticipate there to be an age interaction effect? And have you incorporated such analyses into your statistical analysis plan? Thank you.

So I'll take -- make a brief answer and then turn it over to Dr. Karlin, our Chief Medical Officer, to respond further. I think, high level, when we look at the study and we certainly -- with the rich data set we'll have coming out of the study, I think we'll have a lot of insight and be able to do many, many layers of analysis to understand both the activity of the molecule and the clinical response.

It is not planned as a primary or secondary analysis to look at specific age effects or specific effects in terms of the duration of prior diagnosis with GAD. But that said, of course, we will be exploring -- and exploratory analyses extensively any of the characteristics that could be impactful in informing the design of subsequent studies.

Dan, do you want to take it any further?

Yeah, I could just add, and thanks for that question. The GAD is interesting in that it is obviously a heterogeneous diagnosis regardless of age, but also that there is an accumulation of disease burden later in life, which makes it somewhat different than other (technical difficulty) neurotic illnesses.

And so both age as a factor for analysis and duration of illness, because it's certainly possible that older folks have only recently developed the disorder as well. So we're awfully interested in that and interested in how both the acute effects vary with those factors and, of course, how longer-term efficacy varies with both duration and disease and (technical difficulty)

My last question is for Schond, if Dan was finished. He tailed off a little bit. So Schond, quick question regarding the cash. And I think you mentioned it was sufficient to fully fund into the first half of 2025, I think is what you said.

I guess, my question is, do you anticipate being able to operationalize a Phase 3 study, perhaps, by the end of 2024? And does -- is that cost included in your projections, or would that change depending on the design and size of that Phase 3?

Appreciate that, Charles. I think I will kick it over to Rob to talk a little bit about aspects on the Phase 3. But as it relates to guidance, we pretty much have said that we are pretty set for having a runway into the first half of 2025 and obviously, assuming a success, as Rob has mentioned before, that the goal is to quickly pivot and move quickly into Phase 3.

But we haven't given any guidance as to the timeline on our Phase 3. I don't know, Rob, if you want to add any additional color there.

Yeah. Thanks, Schond. As Schond said, we haven't given guidance on the specific timeline into Phase 2 or for initiation of a Phase 3 study. But certainly, we are very much of the mind that we need to be fast and efficient with our development program and move seamlessly through to subsequent stages of development.

So we are undertaking all the preparations and as much engagement and preparation to seamlessly and very quickly transition into those later stage -- regulatory discussions and also the launch of those later-stage studies. So as we come to data and as we start to get further guidance on those precise timelines, we'll certainly update as well the impact and the financial guidance associated with any further scoping of the later-stage development program.

Okay. That makes sense. Thanks, Rob. Thanks, Schond, for taking my questions.

Thank you, Charles.

Brian Abrahams, RBC Capital Markets.

Hi, everyone. This is Nevin, on for Brian. Congrats on all the progress that you were able to make this quarter.

I was wondering if you could give me a little bit more color on the Catalent formulation deal that you had mentioned, that with the oral dissolving dosage that you have that you might be able to extend out IP protection a little bit more. If you could tell me whether you think that the dissolving dosage would be something that would appear on a potential label and if the PK can't be replicated by like a typical LSD sublingual solid dosing.

And then as a follow-up to that as well, do you think that this formulation would be something that you end up bringing into Phase 3 or would be the go-forward formulation? Or does that kind of depend on how the Phase 1 trials that you intend to run with this pan out?

Thanks so much for the question. So in terms of our dose selection, it is certainly our intent to take forward the ODT formulation in the subsequent clinical trials with MM-120, in particular, assuming a successful Phase 2 study to take it forward in the pivotal clinical trials in order to bring it to commercialization. We should, hopefully, get a marketing application approved.

In terms of the performance characteristics and the protectability, one of the key features of the Zydis technology is also the rapid rate of disintegration and with drugs that have obviously acute perceptual activity that we anticipate in development and certainly later downstream would result in a period of time in the clinic. Every interval of time is important.

And the ability to have a dosage form that disintegrates almost immediately in the mouth and then gives an opportunity for pre-gastric absorption to drive faster uptake absorption in the body, could be quite important in terms of differentiating the product from historical products and certainly from an oral capsule or a solid oral dosage form that is subject to gastric dissolution or disintegration and subsequent absorption.

So our view is that it offers a really compelling opportunity to differentiate potentially on the pharmacokinetics and certainly in terms of the dosage form. And based on all that we know and the proprietary information we have about the performance of LSD by modern pharmaceutical standards, this technology, the manufacturing process, all of this is something that we've been able to take additional steps to protect from a property perspective and also, we think, would be very difficult, if not impossible, to replicate.

The ability to differentiate that product profile, the ability to differentiate -- particularly when it comes to things that would potentially have an impact on the safety or the performance of the molecule are also what can substantially differentiate a product. And really, you can look at some other products, to the first part of your question, such as Biohaven's Nurtec ODT and its success has been taken forward in the clinic and ultimately, to launch now -- owned and marketed by Pfizer.

Thank you. I appreciate that. And if I can ask a follow-up as well. So as you're thinking about actually designing some of the pivotal studies moving forward based upon the FDA's newly released guidance on how to run trials for psychedelics, where they've recommended placebo-controlled trials as well as low- and high-dose studies or using blinded raters and dual monitors, how are you kind of -- or how is that newly released guidance kind of impacted your thinking about designing these trials moving forward?

It's a great question. This is a conversation and an intellectual discussion we've been having with FDA, and then I've been a part of both here at MindMed and other organizations over the past several years. And there's obviously a dynamic with the psychedelic drug class, where the acute perceptual effects, particularly at high doses, is at risk for functional unblinding.

The phenomenology of an administration session of a psychedelic is quite unique and quite profound. But it's also really important that we don't lose sight of the fact that almost every potent CNS drug ever developed, particularly some of the recent ones such as Spravato itself, has dealt with a similar challenge. The functional unblinding log is not hallucinogenic or psychedelic in nature with Spravato.

It is dissociative, and you can see that very, very plainly displayed when you look at the adverse event tables for Spravato versus a placebo. Placebo-controlled research is the gold standard in demonstrating effect. And I think as we've approached and of course, explored all of the available potential options we could use for control conditions, it really is the most robust control condition that can be taken forward into any study.

I think one of the significant challenges -- and I would note that the FDA guidance certainly discusses this but leaves plenty of room for, I think appropriately so, for subsequent discussions and an agreement with the division in terms of the path forward and appropriate controls. But when we zoom out and think about the intent of a control condition as both going to aid in the interpretation of safety data as is noted in the guidance, it will be nearly impossible without a placebo condition to determine the attributability of adverse effects or any sort of safety findings and, therefore, for safety interpretation of placebo is absolutely paramount.

And also really important, if we're actually trying to mitigate a functional unblinding that a control condition that would be used other than a placebo to mitigate that potential functional unblind, would have to be a dose that is perceivable. Giving someone a dose of LSD, for instance, that doesn't rise to the level of having any sort of perceptual effect doesn't really aid, doesn't really mitigate the risk of functional unblinding while it does hamper the ability to adequately interpret safety conclusions.

So in our view, using a sub-perceptual dose of a psychedelic is really one of the most challenging to argue for. Because it really doesn't aid in the thing we're trying to overcome and does create challenges in terms of interpretation of the study results.

So our view is that the appropriate control in studies with psychedelics in our MM-120 program is to use a placebo-controlled research, which again is the gold standard for all clinical research. And it's something that we certainly will be putting forward and feel quite strongly about as we go forward in development.

Okay. Thank you so much for taking my questions.

Thank you.

Elemer Piros, EF Hutton.

Yes, good afternoon. Rob, can you hear me, please?

I can. Thanks. Hi, Elemer.

Yes, hi. So coming back to the Zydis technology. Obviously, there are a number of precedents -- you referred to at least one -- and the improvement in onset of action and bioavailability. Can we extrapolate, specifically to MM-120, what magnitude of improvement could we estimate based on historical data, the number of actual product candidates that have been tested with the technology itself?

Yeah. Thanks, Elemer. Yeah, it's a great question. In terms of extrapolation from other molecules, there's a number of physiochemical and other performance properties that dictate the rate of pre-gastric absorption for any molecule. And certainly, one of the strong reasons for proceeding with a Phase 1 study to characterize exactly that, to characterize the rapid nature of onset, the time to onset of any absorption and the time to onset of any sort of perceptual activities, will give us the specific insight.

So as we progress through that study very quickly and have the -- data become available, I think we'll be able to give much more precise and appropriate -- it's a little bit premature for me to extrapolate from other molecules. But certainly, some of the initial in silico modeling we've done has given us confidence that we would see an opportunity for enhanced performance and enhanced PK profile that will both potentially be differentiated and could be more attractive.

So that was one of the motivating factors for taking that product forward. And as we come to PK data with that formulation as compared to our Phase 2 formulation. And we'll have -- direct insights can provide a much more extensive answer on the exact difference.

Yes. And hearing your commitment to move forward once you better characterize in Phase 1, it certainly appears that it cannot make things worse. It won't disimprove bioavailability. Is that correct or safe to say?

Well, it's certainly one of the features of a molecule that is highly potent, penetrable, and that we know when we give a solid oral dosage form such as a capsule, that then requires a burst time and dissolution time. A product that is administered in the mouth and then swallowed, for instance, with water presumably would have a similar degree, a similar profile upon entering the stomach.

And so while we certainly need to demonstrate this and want to characterize the response, we feel like there's a limited downside risk in terms of worsening outcomes for the characteristic -- again, that is subject to confirmation and why we're moving forward with a PK bridging study.

Sure. And my second question is about the draft guidance and the nature of inclusion of placebo and a low dose of the active drug.

Do you think that you will have done enough work in this Phase 2b to at least partially satisfy that? Or do you think that you would have to continue an exploration of identifying what is the true safety profile of MM-120? And what is the differential between the low dose and the presumably most effective dose in terms of clinical effect?

So in terms of selection of a dose moving forward, it's going to be informed by the results from our Phase 2 dose optimization study, which -- I think it's worth reiterating that the reality is this is the most extensive and rigorous exploration of dose response in a patient population certainly with LSD, but to our knowledge, with any drug in the entire class. So we'll have a very rich data set and a lot of information that we can then use to support decision making and proposals for subsequent clinical trials.

In terms of characterization of safety, it's really a function of the doses that a sponsor would be intending to move forward and ultimately bring to a marketing application. So as we identify those doses and see the response, it certainly will inform subsequent development.

But I think there's multiple questions that a program can ask. And at times, one of the questions put forward is to characterize, of course, the lowest effective dose. That's quite different approach than using a sub-perceptual dose that presumably does not have a robust clinical response and using that sub-perceptual dose as a control condition in lieu of a placebo.

That's where we really have focused. And with respect to the guidance, I feel that it's really appropriate to bring forward placebo-controlled research into all subsequent clinical trials.

Understood. Thank you very much, Rob.

Thanks you, Elemer.

Frank Brisebois, Oppenheimer & Co.

Hi, thanks for taking the question. Just a couple here. In terms of the PK for the Zydis formulation, the ODT formulation, do you share when you would expect that data to come out? And is that data that you'll share or just use internally to figure out how to use it in a further trial?

Yeah. We haven't given guidance to the exact date when that data will be available. And the extent of the dissemination of those results are going to be used primarily for internal decision making to support dose selection and transition of -- moving into a Phase 2 meeting and ultimately, assuming a successful Phase 2 study, moving into several studies.

But at that point in time, once we have the sufficient data and sufficient clarity on the results of that study and the implications for dose selection, we'll certainly be in a position to share more about the outcome of that study.

Understood. And in terms of the digital efforts, is this something that you'll share? Is it something that you intend to use in Phase 3 or anything that we should expect to see in a Phase 2b? Or is this -- any color there on when we can expect to see data on the digital effort here?

Yeah. So the digital medicine program -- and I'll ask Dan Karlin to speak a little bit further to it. But it is not being used currently in our Phase 2b study. But certainly, as we continue to explore and align with the agency, both CDRH and CDER, on the path forward and the inclusion of our digital medicine applications in clinical research, we really want to make sure we have alignment there before we make any commitments to exactly when it would be used in our development program.

But certainly, our intent as we progress is to integrate it into clinical research with MM-120 at some point. And we, in parallel, have a number of opportunities through our collaborations to conduct clinical research with our MSMS system in conjunction with LSD and also even more extensively, with Spravato administration, which gives us that ability to be really effective and really efficient in our development approach for the SaMD product that we could ultimately then leverage over into a product that we aim to be labeled for use with MM-120.

And I'm happy to add here that we are currently in the process of collecting data. And prior to inclusion, certainly in a clinical program, we want to be sure that we were confident that we could interpret and understand any data coming from the software medical device product, and that CDRH and CDER were also comfortable with the interpretability of those data. So that will be an ongoing conversation as we approach the program, as we continue to develop the MSMS product.

Okay, great. And then just lastly, can you just remind us of how psilocybin understood is the potency difference maybe when you compare psilocybin to LSD? And if it's -- the amount full that it's different, how understood is that just as we're trying to gauge the dose response and the different doses of your Phase 2b? Thank you.

Yeah. Thanks so much, Frank. So there's obviously -- there are some studies, including with our collaborators at University Hospital Basel, that have looked at these comparative effects, perceptual effects, at least, of various doses of LSD and psilocybin. When we look at that kind of collectively, generally, the approximation, and it is just that an approximation, that 100-microgram dose would correspond more closely to about a 20-milligram dose of psilocybin.

And by extrapolation, a 200-microgram dose would be something more along the lines of 40 milligrams of psilocybin. In terms of, again, those acute participant-rated magnitude of perceptual effect, now, the extent to which that correlates with other target engagement and other clinical outcome assessments, is certainly something -- a very different question.

But when you think of the potency of the molecule, it seems -- it appears to be about 200 times more potent than psilocybin, which, of course, with the dose range we're testing, gives us a pretty extraordinary range of doses in comparison that will be explored, including -- when we look at the historical data, including both the 50 -- all of the 50-, 100-, and 200-microgram doses, which very well may help us achieve a level of acute perceptual activity that we would think correlates to some degree of clinical response.

But that's, of course, what we're asking in this study and what the data will inform us around in terms of which of those doses, we believe, is most appropriate to take forward based on the response in the disease population.

Great. Thank you very much.

Thanks, Frank.

Jonathan Aschoff, ROTH MKM.

Thank you. Hi, guys. I was curious if you could just -- a little housekeeping question, this G&A. How much of this 2Q was related to the annual meeting? And so what might we not expect to see recurring?

Appreciate that question. We haven't actually broken that out. But if you're looking for kind of a forward cadence on just operating expenses in general, I think the way to probably look at that is we're getting into kind of the tail end of our Phase 2 enrollment for MM-120. And also, we're on the back end, as Rob mentioned earlier, with our ADHD program, as well as you'll start hearing more and more about our MM-402 program.

So I think that if you look at the general cadence in the first half of the year -- I'm sorry -- in the back half of the year, the expenses would be -- you'll probably see an uptick on the higher side on the back half of the year relative to the first half of the year.

So I mean, G&A should progress at this level. It shouldn't come down, you're saying?

We haven't given any specific guidance on the G&A line item. I think it's more prudent to look at as an overall on the operating expense line for the overall company. And so, again, I think the way to look at it -- we haven't given any guidance on a number of these different components. But I just want to give you something directionally to generally think about.

Okay. 2H over higher than 1H -- got it -- for OpEx. Thanks. So the onset for 120 as it is now, what is it? And what are you looking for out of ODT 120 for onset?

So that's a great question, Jonathan. Yeah. So when we look at, again, historical studies of LSD in various forms, it appears that the Tmax has been reported somewhere between 60 and 90 minutes.

And so something that would be quite differentiated would be anything -- and again, it's really important that this is a unique drug class, unique product candidate, which, of course, brings along unique considerations around the things that could impact the ultimate safety and effectiveness of a product, such as the time to onset of those perceptual activities, the ultimate duration of those perceptual activities, and, of course, the standard PK metrics, such as the Tmax, Cmax, AUC, and such.

Certainly, anything that brings in the speed of absorption would impact the time to onset, potentially, of any sort of perceptual activity that, again -- or the PD effect of these molecules. And so, we're looking at observing a faster absorption than what we've seen with, for instance, oral capsule, and ultimately seeking to characterize the differentiation between, again, that time to first absorption, but also the time to the maximum concentration and those other standard PK characteristics.

Anything that brings in that timeline, even by a small period of time, could be impactful in terms of the duration of the overall response. It could be quite impactful because I think it would be difficult to justify a downstream product, such as a generic entrant that had different perceptual time course and a different perceptual profile, and assume that it could be reliant on the same sort of activity.

So when we see these unique characteristics and unique considerations around a drug class such as this, it's really important that we're -- the precision in terms of the performance of a product --

Okay. All right. And you were mentioning pre-gastric, I guess, you're trying to get around. Is there much of a food effect or not really?

Well, the food effect would certainly -- could potentially be impacted by the extent of pre-gastric absorption. Something -- a formulation, for instance, that absorbs primarily pre-gastrically would be at lower risk for a food effect, of course. So it drives both the impact of things such as gastric retention, but also the time and the speed to which you see absorption of the API. Ultimately, that drives the timeline to first onset of any sort of PD effects.

Okay. And can we assume that the dropping of enrollment was overwhelmingly due to -- you're going to go forward with an ODT, and you still have close enough to 90% power? So why bother with 20 more?

It was -- that decision certainly was informed as we looked at and finalized the statistical analysis plan, looked at the likelihood of obtaining our primary study objectives, and undertook to understand the likelihood of seeing a statistical positive result in the event that we see a clinically meaningful result. And as I mentioned, even if we see a marginal improvement over the standard of care, where we see effect sizes of 0.4 or less, it still gives a high degree of confidence in the ability to detect with a statistical and clinically meaningful effect with 180 patients.

So when we look at -- and of course, any sort of savings and efficiencies we can build into the program, we're always searching for those. And this was an opportunity to do exactly that without having to sacrifice on the power, the likelihood of success of the study.

Yeah. Sounds totally rational. Thank you, guys.

Thanks, Jonathan.

Patrick Trucchio, H.C. Wainwright.

Hi, good afternoon. This is Luis, standing for Patrick. I'm going to give you a little breather and ask for a kind of a different question. I'm trying to model the population, the patient population for GAD. And there has been a recent study saying that, pointing to the increased prevalence rates of GAD and other mood disorders -- you might be familiar with the study in mental and substance use disorders.

So this suggests 20 million adults suffered from GAD in the past year. Can you provide some context in this data, specifically if we're looking at a new normal and a 10% prevalence in this post-pandemic era? Or do you think this is going to plateau and then come down? Thank you.

Yeah. Thanks, Luis. It's, of course, very difficult to predict epidemiological changes in terms of prevalence of an individual diagnosis. But we certainly -- anecdotally, as we're out in the world and engaging with payers, with providers, with patients, we hear over and over and over again both the magnitude of the problem and several conversations where we talk about we solved for a viral infectious disease pandemic, but we have an ongoing pandemic or epidemic in mental health disorders.

And really, anxiety as a symptom cluster, but generalized anxiety in itself has been something that's been grossly overlooked. And we have new data that shows just how much it's been overlooked, how significant of an issue it is.

And so certainly, the relative lack of focus for innovative new treatments to target GAD over the past couple of decades, the fact that there hasn't been a lot new -- and over that same period, we've seen -- based on comparison of the historical data to the latest data, we see a substantial -- a tripling of the prevalence of GAD. To us, that signifies the reality that it's been overlooked.

It is still a significant unmet need to target GAD patients. And with our study coming, it seems to be, in our view, coming right at the appropriate time where the need has never been greater, and our opportunity has never been greater by extension.

Thank you. That is helpful. If I'm allowed, I'll just ask a quick question on your 402 program. When is the Phase I trial expected to start, and if you're looking at any specific biomarkers or limiting data to determine target engagements? And what will be your target population here? Thank you.

Yeah, thanks so much. Our Phase 1 study is intended to be initiated by the end of 2023. We also have the parallel study ongoing through our investigator-initiated study through our collaboration with University Hospital Basel, which we've been informed we anticipate being able to report out study results from that study in the first half of 2024. As we progress, as we get further along in terms of design, we'll be speaking more to the specific population and ultimately, the specific endpoints of that clinical program.

But certainly, our intent is to characterize the safety, the PK, the pharmacodynamics of MM-402 in healthy volunteers, but also as early as possible in development to bring in patients who are otherwise healthy but diagnosed with autism spectrum disorder to ascertain the acute response to MM-402 administration, both for understanding the pharmacokinetics, the safety, tolerability, the PD effects, and ultimately, trying to get some indication of -- if this is a molecule, MDMA and R-MDMA particularly, where we want to observe some characterization of the acute effect of the molecule.

In many instances, we anticipate that would be something that would potentially even impact self-reporting over the course of a day of exposure. So we are seeking to bring in patients as early as we possibly can in the development program to get some indication that we are seeing activity and, of course, then expanding and continue on to later stages of development.

That was great. Thank you.

There are no other questions at this time. I would like to turn the floor back over to Rob Barrow for closing comments. Please go ahead.

Thank you. Thank you, operator, and thanks, everyone. Thanks, everyone, for the questions today. We appreciate you joining us and look forward to providing further updates.

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