AtaiBeckley Inc. (ATAI) Earnings Call Transcript & Summary

Hello, ladies and gentlemen, thank you for standing by, and welcome to Atai Life Sciences conference call. [Operator Instructions] As a reminder, today's call is being recorded. Earlier this morning, Atai Life Sciences issued a press release to provide the details of the strategic investment in Beckley Psytech. The press release is available in the Investor Relations section of the company's website. As a reminder, during today's call, Atai Life Sciences will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives and timing and success of our clinical trials, regulatory applications and commercial launches. Such forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Atai refers you to the company's SEC filings for discussion of risk factors that could cause our actual results to differ materially from those discussed today. At this time, it is my pleasure to turn the call over to Atai Life Sciences Co-Founder and Chairman, Christian Angermayer.

Thank you, operator. And hello, and thank you, everyone, for joining us this morning, this afternoon, wherever you are in the world. Today, we are very thrilled to announce our strategic investment into Beckley Psytech, a private biopharmaceutical company focused on transforming short-duration psychedelics into clinical treatments for mental health conditions. I am joined today by my 2 dear co-founders, Florian Brand, CEO of Atai, and Dr. Srinivas Rao, Atai's Chief Scientific Officer, who both will walk you later through the strategic rationale for this investment and provide an overview of Beckley Psytech's programs. But first, let me give you my thoughts. Since we founded Atai in 2018 we have, as you all know, had a bold and ambitious vision to heal mental health disorders so that everyone, everywhere can live a more fulfilled life. When it comes to mental health, there is no one-size-fits-all solution. And so with this investment in collaboration, we continue our dedication to building a diverse portfolio of therapeutics that addresses the heterogeneity in mental health patients. Most importantly, and I'm really, really proud of that. We always since our foundation had the ambition to be not just a psychedelic company, but the psychedelics company. With this transaction, we continue now to cement and strengthen our position as the leading company focused on the Renaissance of psychedelics with a portfolio that we believe encompasses now with this acquisition, all major psychedelics with therapeutic use case. So we have DMT, as you know. Now we have 5-MeO-DMT with today's acquisition. We have Ibogaine. We have R-MDMA. We have Psilocybin via our stake in Compass and now [indiscernible] via Beckley again. I also want to reiterate that while we take great pride that we have been the first ones who had the original idea actually back in 2014 at the place where I'm right now, to bring back psychedelics into the medical world. And then, as you know, it took us several years to transform the idea into the seed funding of Compass and the foundation of Atai, we are indeed standing on the shoulders of giants who have been advocating for the therapeutic use case of psychedelics since the 60s. And Beckley's Founder, Lady Amanda Fielding is one of these giants. So joining forces with Amanda, her family and her team makes me and us especially proud also in terms of historic significance of this transaction. But back to the deal. As you know, consistent with our vision, we are deploying an operating platform model that enables us -- it enables a modular and pragmatic approach to generating and capturing value for our shareholders and most importantly, allows us to accelerate the development of therapies for patients. This includes progressing programs in-house, like, for example, our DMT program, which we own 100% of, or our R-MDMA as well as making strategic investments and acquisitions like we've done today. Especially in times like we have at the moment, when [Technical Difficulty] of biotech companies, in my point of view, in my opinion, are distorted and artificially low, great founders usually don't want to sell out. So to say bluntly, I would actually have been worried if the Beckley founders would have wanted to sell 100%. But what they all do want and need in times like these is a well-capitalized partner who can help them achieve their goals. Our platform approach allows us to be this partner and to structure win-win deals and by that, capture the opportunities times like the current one provides. But I hope you all got that I'm really super excited about the transaction. I will now hand over to Florian to talk to you more about the details, the strategic rationale behind the investment and to share especially an overview of Beckley Psytech's exciting programs. And then we have questions later. And again, thank you all for your interest. Florian, over to you.

Great. Thanks a lot, Christian. Good morning, everyone, also from my side. Today's strategic investment in Beckley Psytech's really underscores our long-standing conviction in the clinical development of psychedelics. Data today suggests that short-duration psychedelics such as Beckley's 2 programs, BPL-003 and ELE-101 could offer clinical benefit comparable to longer-duration psychedelic compounds in a more efficient and scalable way. With shorter treatment times and reduced medical resource requirements, we believe that shorter duration psychedelic could open up access to broader patient populations. Additionally, we believe the 2-hour interventional treatment window that has already been established by J&J's SPRAVATO or esketamine could potentially be leveraged for commercial rollout of shorter duration psychedelics if approved in the future. This investment brings BPL-003, which is an intranasal formulation of 5-MeO-DMT and ELE-101 an intravenous simulation of Psilocin into our mental health innovation platform, reinforcing our position as the biopharmaceutical company with the largest and most diverse portfolio of clinical stage psychedelics in development. BPL-003 and ELE-101 are on track for multiple anticipated clinical readouts within the next 12 months, importantly, including a Phase IIb readout of BPL-003 in treatment-resistant depression, or TRD, anticipated in the second half of this year. We are very much looking forward to collaborating with the Beckley team and to exploring together potential synergies and such as the use of digital tools for patient support, all with the goal to accelerate the development of urgently needed mental health innovations. Before we jump into more details of the 2 drug development programs, let's have a look at the high-level yield terms of this strategic investment. With this transaction, we acquired 35.5% of Beckley Psytech to a total investment of $50 million, consisting of a $40 million direct investment into the company and $10 million in secondary share purchases. In addition, we received a 1:1 warrant coverage with a 30% premium on the primary issuances and we have the right to appoint and hold 3 of 9 seats on Beckley Psytech's Board of Directors. Importantly, Atai will hold a time-limited right of first refusal and first negotiation on the future sale of the company, asset sales or other transfers of commercial rights as well as an indefinite right of first negotiation for BPL-003 and ELE-101. Before I will hand it over to Srini, who will dig into each program in greater detail, I will provide you with a brief overview of each asset's key features. Let's start with BPL-003, which is an intranasal dry powder formulation of a novel patent-protected salt in crystal form of 5-MeO-DMT. 3 trials are currently ongoing with BPL-003 with the Phase IIb trial actively recruiting in the U.S. under an open IND that was accepted by the FDA in February of last year. The other compound ELE-101 is an intravenous formulation of Psilocin, which is the active moiety in the [indiscernible] Psilocybin is administered orally. As such, we view ELE-101 as a relatively derisked asset for its stage of development as it leverages the robust proof-of-concept data that has been established with Psilocybin across multiple trials. Both of these patent protected assets are characterized by a short duration of psychedelic effect of approximately 2 hours or less, and both of these assets have, in our view, the potential to be first to market and best in class. As you can see here on the right side of the slide, this transaction adds multiple near-term clinical milestones to our catalyst map. Importantly, the Phase IIb trial of BPL and TRD is anticipated to read out top line results in the second half of 2024. And in addition, results from 2 open-label trials with BPL-003, 1 in TRD and the other 1 in alcohol use disorder are anticipated in the first half and middle of this year. The results of the combined Phase I/IIa trial of ELE-101 are also anticipated in the first half of this year, and this compound will be tested in patients with moderate to severe MDD rather than TRD in the Phase II portion of this trial. Srini will now contextualize these assets into our broader depression portfolio and then walk you through some clinical data on the trial design of the BPL-003 and ELE-101 programs. Over to you, Srini.

Thanks, Florian, and thank you to the audience for joining us this morning. Both BPL-003 and ELE-101 augment our portfolio of psychedelic drug candidates aimed at addressing the treatment of major depression. As I'm sure many of you know, depression is a highly heterogeneous disorder. 2 people can meet the DSM-V diagnostic criteria for MDD yet have completely different clinical presentations. As such, we're proud to have assembled a diverse portfolio of assets to address this prevalent yet highly underserved indication. As you can see on this slide, the 4 assets in our portfolio are differentiated from one another pharmacologically and by target indication, route of administration and in-clinic duration. Compass' COMP360, a proprietary former Psilocybin represents a first-generation psychedelic therapy for TRD. It's an advanced clinical development with 2 Phase III trials currently ongoing, the first of which is anticipated to read out midyear. COMP360 is ingested orally and it results in a psychedelic experience in the last 4 to 6 hours. Existing interventional psychiatry clinics are typically configured to deliver some combination of ketamine, esketamine or rTMS all of which involve clinics days of 2 hours or less. ELE-101 has the potential to directly utilize this existing infrastructure, as Florian indicated, providing the same active moiety as oral Psilocybin, but falling into that 2-hour window. Further, ELE-101 is being developed for the treatment of MDD rather than TRD as is the case with COMP360. Both BPL-003 and VLS-01 rely on transmucosal absorption as neither moiety are always orally bioavailable. As mentioned previously, BPL-003 is administered intranasally and is systemically absorbed through the nasal mucosa. As many of you are already aware, VLS-01 is an oral thin film that is applied to the buckle or internal cheek mucosa and is absorbed there. In terms of pharmacology, DMT itself shows approximately the same 5-HT2A to 1A receptor binding ratio as Psilocin. Both primarily target the 2A receptor, and this activity is hypothesized to drive psychedelic effects. However, the pharmacology of 5 Methoxy DMT is different from both Psilocin and DMT as it binds the 5-HT1A receptor approximately 100x more tightly than the 2-way receptor. This difference potentially underlies the subjective experiential differences that have been noted with 5-MeO-DMT versus other psychedelics. These pharmacological and experiential differences may have therapeutic implications, an important consideration given the heterogeneity of the population of patients with depression. Let's dig a little deeper into BPL-003. Our Phase I SAD study was recently completed, in which BPL-003 was found to be safe and well tolerated across the 7 doses tested. No severe or serious adverse events are noted, and the most common AEs were nasal discomfort, nausea, vomiting and headache. Dose-proportionate PK was observed as was a short Tmax of 6 to 17 minutes. The duration of exposure was short with plasma concentrations approaching 0 within 90 minutes of administration across all dose levels. From a pharmacodynamic standpoint, BPL-003 demonstrated robust psychedelic effects as measured by the subject of drug intensity scale or [ SDI ] in this Phase I study at doses of 6 milligrams and above. Indeed, all subjects in these dose groups achieved scores of 7 or greater out of 10 on the [ SDI ]. Notably, subjective effects came on within a few minutes of administration were prominent for 30 to 45 minutes depending on dose and generally dissipated by 90 minutes. These promising results compelled Beckley to advance BPL-003 into 3 Phase II trials. As noted earlier, all 3 of these trials are underway now with data readouts anticipated over the next year. Let's dig into the first trial, anticipated readout in TRD. In summary, this open-label Phase IIa trial is exploring the safety and tolerability of 10 milligrams of BPL-003 in 12 patients diagnosed with TRD. The trial is enrolling patients presenting with moderate to severe symptoms who are willing and able to discontinue antidepressant medications prior to the dosing of BPL-003. The subjects will be followed for approximately 12 weeks and several exploratory end points focused on efficacy will be collected. These include the MADRS at multiple time points, the CGI, the PGIC and a measure of quality of life, the EQ-5D. We anticipate results from this trial to be available in the first half of this year. Let's move now to the Phase IIb trial, which is actually very similar to COMPASS' Phase IIb trial of COMP360 in both size and design. Briefly, this is a randomized double-blind study assessing the effects of a single administration of BPL-003 in approximately 225 patients diagnosed with moderate to severe TRD. While Compass's Phase IIb, this trial is dose controlled with subjects randomized to receive 0.3, 8 or 12 milligrams of BPL-003. The primary endpoint of the study is the MADRS assessed at week 4 with key secondary endpoints that include safety and other measures of efficacy at multiple time points. This is a global trial with sites in the U.S., EU and Australia. The first subject was dosed in October of last year, and as mentioned earlier, top line results from this trial are anticipated in the second half of this year. It's also worth mentioning that patients who complete the Phase IIb study will have the opportunity to enroll in an open-label extension trial. This trial will evaluate the safety and efficacy of an additional administration of 12 milligrams of BPL-003 over a follow-up period of 8 weeks. We expect these data will be highly informative to the design of future studies. With that, let's turn our attention to ELE-101. As mentioned earlier, ELE-101 is a benzoate salt formulation of Psilocin that is administered intravenously via short infusion. There are 2 potential benefits of this approach. First, it's anticipated to result in less variability in systemic Psilocin concentrations compared to oral Psilocybin. Second, based on PK modeling, IV Psilocin is expected to have a much shorter exposure versus oral Psilocybin. This, in turn, should translate to a short duration of psychedelic effects lasting less than 2 hours. Such a profile may be more convenient for both patients and physicians compared to a 4- to 6-hour experience. We anticipate this may allow for increased commercial scalability and thus improved access for patients overall. Beckley is investigating ELE-101's use in MDD and a combined Phase I/IIa trial is currently ongoing. The Phase I component of this combined trial involves a SaaS design and is focused on assessing the safety, tolerability, pharmacokinetics and pharmacodynamics of IV ELE-101. 4 dose cohorts are planned, but up to 6 cohorts are possible. The goals of this Phase I trial will be to confirm the hypothesis that IV Psilocin results in reduced PK variability and a short duration of both exposure and -- psychedelic effects compared to oral Psilocybin. Upon successful completion of the Phase I trial component, a dose will be selected and advance into the open-label Phase IIa portion of the trial. This will enroll 12 patients with moderate to severe MDD rather than TRD as is being tested with BPL-003. These subjects will be given a single administration of ELE-101 and then followed for 4 weeks. The primary objective of this Phase IIa trial will be to assess the safety and tolerability of ELE-101 in an MDD patient population. However, exploratory efficacy endpoints, including the MADRS, will be measured at multiple time points. The company anticipates reporting top line results from this trial in the first half of 2024. And with that, I'll hand it back to Florian to wrap up. Florian?

Thank you, Srini. At Atai, our ambition is to build the leading mental health innovation company with a focus on differentiated assets with prior clinical evidence. Today's strategic investment underscores our long-standing conviction in developing psychedelic-based treatment, as I mentioned before. And we believe that this collaboration with Beckley Psytech can lead to accelerating the development of promising short-acting psychedelics with first-in-class potential, such as BPL-003 and then have the opportunity to drive broader patient access. As a result of this transaction and the addition of multiple meaningful clinical catalysts over the next 12 months, Atai becomes even better positioned to generate value for our shareholders and patients. We would now like to turn the call back over to the operator to open up the line for questions. As a reminder, please limit your questions to 2 per analyst. If we don't have time to answer all your questions, we will certainly try to schedule time with you after this call. Operator?

[Operator Instructions] Our first question comes from Charles Duncan with Cantor.

Yes, Florian and Srini. Congratulations on this transformational transaction. And Christian, nice to hear from you. Happy New Year, pretty interesting increase in visibility on the pipeline I have a couple of quick question. Regarding BPL-003. First of all, could you give us a sense of the enrollment thus far? I know that treatment only began in October. Have any patients actually been through treatment and have any entered the open-label extension? And then as a follow-up, Srini, can you give us a sense as to the effect size, do you think short-duration psychedelic experience may increase or reduce the effect size and then the durability?

[indiscernible] Happy New Year, like I forgot because we already fell in work mode with that transaction. But especially to Charles, happy new year. It's going to be a great one.

Srini, do you want to jump in on these questions?

Yes, absolutely. So Charles, as you -- as we noted, I mean, we're basically just -- we just guided that the first patient was dosed in October and we're guiding that the trial will read out at the end of the year. So we really haven't given any more color than that on this study. You and I have had multiple conversations about the correlation between duration of psychedelic effect and either magnitude of efficacy or duration or durability of efficacy I mean the short answer is I don't think that question has been fully elucidated yet. Obviously, this trial will be important to generate that data. As I've mentioned in multiple calls previously, I think there is -- we're really targeting a sweet spot with the VLS-01, which we think of as a sort of a 30- to 45-minute psychedelic window, not too short, not too long a sort of goldilocks sort of territory. BPL-003 squarely hits that as well. And as you saw from the simulation slide, the PK slide with ELE-101. We anticipate that to hit something very similar as well. So obviously, this is a really important question and something that's TBD. Couple of trials that are ongoing that should address this. And I think this is one of the largest -- the BPL-003 trial is one of the largest and most powerful study to really address this question.

Very good. That's helpful. If I may ask a question of you or Stephen or whoever -- regarding the IP, I'm wondering the kind of diligence that you did here? And do you have a sense of kind of the durability of the intellectual property protection for these 2 agents?

No, I just wanted to say -- of course, Charles, we took a very close look at the [indiscernible] an essential part of diligence. And Srini, maybe you want to kind of give some high-level comments.

Yes. I mean, so we have patents that are very similar to what Compass has generated so their salt forms. There's crystal polymorphs. There's some formulation patents, depending on the asset. Obviously, spent a lot of time on this. I think as usual, there's lots of opportunities to create additional IP as clinical data comes in. That's an important question.

Our next question comes from Ritu Baral with TD Cowen.

My first question is on the 003 Phase IIb trial design. That 0.3 milligram dose, I'm assuming that, that is a subclinical comparator arm just in the landscape of psychedelic treatment. What is the placebo effect that you -- like -- how did Beckley choose the 0.3 and what sort of placebo effect are you expecting from that arm? And then -- the primary endpoint here is a HAM-D, whereas most of the trials that we've seen with psychedelics have used the MADRS. Can you talk about why the HAM-D and what it might show versus other MADRS data sets?

So let me address that first -- the second point first. It is MADRS the 4 weeks on this one.

Oh, I'm sorry. You're right. Sorry about that. The inclusion cut...

Yes, yes, no worries. Yes. So the question around dosing is an important one. So in the slides kind of pointed out the fact that 7 doses were tested, the laws in that context was one. And there were some perceptual observations there. So that was the reason for the decision to go to 1/3 of that dose is 0.3 they went. They actually did generate some clinical data with that dose as well. It just wasn't presented today. So there's -- these are all psychedelic-naive patients. So there's obviously going to be some expectation. But nonetheless, in this context, there was essentially no significant or perceptual perceptions of alteration -- perceptual alterations with that 0.3 milligram dose. So again, very good analogous to how Compass has approached it.

Would you expect a similar placebo effect on the MADRS versus other depression studies at that 0.3 in this trial design?

I mean broadly, again, I think that we are expecting something very similar in terms of magnitude, et cetera, to what Compass saw, right? So there is -- there really isn't much of any effect of 0.3 milligrams. I think it's functionally very much a placebo in this context.

Got it. And then the next question is 101, could you disclose like where -- which dose cohort are you at between the 4 per Slide 15. I'm just wondering how we should be thinking about the side effects of usual suspicion with Psilocin, the nausea, the headache, et cetera, maybe blood pressure and what you're seeing to date at which dose.

Yes. We haven't really provided any more color on that other than to say that we do anticipate the whole trial wrapping up certainly by the end of the middle of this year to the first half of this year. But you're absolutely right. I mean those are the side effects that one would anticipate with Psilocin. It's an IV infusion, so you have a little bit more latitude there than oral administration. In terms of duration of infusion, for example. But yes, it's the same as you see with other psychedelic compounds. The headache and nausea, vomiting are the main ones that we're watching out for.

But you personally can see the tolerability profile being kicked off and have seen it before the deal?

We've seen some data. Yes. But we haven't -- again, we're not guiding on that. Yes.