COMPASS Pathways plc (CMPS) Earnings Call Transcript & Summary

Good morning, good afternoon, everybody. My name is Cailin Mcgurk. I'm a Managing Director in the Global Health Care team at Morgan Stanley. It gives me great pleasure today to welcome George Goldsmith, Chairman, Co-Founder and CEO of COMPASS Pathways. Before we get started, if you'll just bear with me, I might need to read a very brief disclaimer. So for important disclosures, could you please refer to the Morgan Stanley research disclosure website at www.morganstanley.com/research disclosures. And if you have any other questions, please refer those to your Morgan Stanley sales representative. And with that, George, welcome. Great to have you at our conference. I can say after the last 18 months, which has been incredibly tolling in terms of mental health for all of us around the world, it's great to have COMPASS.

Maybe 1 thing that I thought would be really sort of interesting to start with is, I know that you've been talking about transforming mental health care as your purpose, perhaps you can start by telling us a little bit more about what that means and how you see mental health and obviously, the areas you're involved in evolving going forward?

Thank you so much, Cailin, and great to be here with you today. This started as a personal journey for us about 6, 7 years ago when a family member became deeply affected by depression, OCD and anxiety. And we thought how hard could this be to address. We sought the best quality psychiatric resources found in the U.S. But no matter how much he was treated, he seemed to be getting worse and worse. And this highlighted for us a huge unmet need that we felt first up close and personal. But the more people we spoke with, we realized that there was actually a huge unmet need that far too many people weren't helped by the existing model of care. And so when we formed COMPASS, we didn't want others to travel the path that we have and so many others do. So we're really looking at how we accelerate patient access to evidence-based innovation. And that can come from anywhere, and it is the 21st century. So it might be medicines, it might be technologies, it might be new models of therapies. Most likely, it's all those things combined, and that really gave us the genesis of what we want to do in COMPASS, which is to develop evidence-based new models of care, and we're starting with psilocybin therapy because it's so interesting and such an interesting model where we have an episodic monotherapy, just something given just once. That seems to have a durable benefit from many people in early studies.

That's great. And so George, maybe just following on for that in terms of obviously breaking new ground and establishing new models of care via therapeutic or otherwise. I saw the announcements very recently about the appointment of Dr. Guy Goodwin as your CMO. Perhaps you can tell us about his involvement, I think, in the field more broadly, obviously, with COMPASS? Maybe without putting words in his mouth, what really sort of motivated him to join the team?

Well, it was interesting. About 6 years ago, I gave a presentation at the European Brain Conference and -- about this emerging area. And Guy and I chatted afterwards. I know -- Guy was the Former Chairman of the Oxford Psychiatry Department, President of the British Association of Psychopharmacology, European College of Neuro and incredibly -- Neuropsychopharmacology, incredibly esteemed person, and he was really curious about this. Also really intrigued about new models of care. His focus as long has been on mood -- so-called mood disorders. And Guy was really intrigued and the more we spoke, the more interested he became. And eventually, he became part of the team that led us to design our Phase IIb study. By the way, we have FDA breakthrough therapy designation we received in 2018 because of the profound unmet need and the lack of existing treatment. So he became really excited about that, worked with us to design the protocol, but -- and was our coordinating principal investigator. But a couple of months ago, he decided to come in and really be part of this story, and he's really excited about it, and we're super excited about having him.

Fantastic. Maybe just following on from that. You've touched upon, I think, what the audience is going to be particularly interested in, and I certainly am. I think in early July, we saw the press release in relation to the Phase IIb study. I understand that the last patient has gone through their treatment experience. Maybe you can elaborate on the study? How you've designed it? What you're expecting to see in terms of the results of that study? And how it's going to help you obviously, design and move forward in terms of next steps?

So I'm happy to do that. Maybe I'll step back and just give a little bit of context. Psilocybin is an active ingredient in so-called magic mushrooms, a psychedelic medicine. It was first developed by Sandoz in '58, never registered as an experimental medicine. And kind of after the 60s, it went into -- it wasn't distributed anymore, the research died, following the 60s. And a group of brave researchers picked this up in academia, again, probably in the early 2000, simply because the lack of innovation and the fact that there were some very interesting signals. We saw that. And we saw, in that research, unprecedented effect sizes in small studies, some open label, some controlled. And that really gave us an interest of perhaps given the experience we went through that this could be a source of innovation. And those carefully controlled and developed studies were Johns Hopkins, Imperial College, Zurich. So there's a history here. However, what was really needed was an evidence base in order to take these to patients, and that's really where COMPASS came in. And so in developing studies, what we're looking to do is to develop the evidence base that will enable us to bring this innovation to patients. Now just to give you a tiny sense of what we've -- what's been seen in this field. Again, unprecedented effect sizes from small studies, particularly focused on depression, patients suffering with depression. But then also what we have is a very unique thing. It's we remove people from existing models of treatments, SSRIs, SNRIs. We then provide this very powerful carefully supervised experience where people are prepared, they receive dosing under supervision, lasts about 6 or 8 hours and it's a single treatment. And then there is integration. And it's really to help people see kind of their narrative that shapes their world view quite often in mood disorders. And it shifts that narrative. So this is something that's very powerful. So powerful that over 70% of people in the Johns Hopkins study said that this was actually among the top 5 most meaningful experiences of their life, this single 6 to 8 hours, and over 30% said it was the most meaningful. So we're working with something quite different than a traditional SSRI or SNRI with this. And I think that's really important to note. So it's a very different model. Now what is our Phase IIb study? Our Phase IIb study is looking at a population suffering tremendously, so-called treatment-resistant depression patients. These are people who are not resisting treatment, but who don't -- aren't helped by existing treatments. 2 to 4 failures carefully validated. We designed the study with the experts formerly of the National Institute of Mental Health and the largest study in TRD. Guy was part of that. The study is really designed to look at the dose. Is a 10-milligram or 25-milligram more safe, more effective, tolerable, et cetera, so that we can go into a comprehensive Phase III program. So what we're seeking to do is to build upon the early research in a highly controlled study. We have 3 arms of 1 milligram, 10-milligram and 25. We're comparing 25 to 1, 10 to 1, again, looking for that dose that we can take into Phase III. And we're doing this in a way where we're administering it once and then having a primary endpoint of do people respond to a 50% reduction, more to the 10 or the 25? And how long is that response maintained? In prior studies, again, 1 dose, dose with support, I think this is important. There is a psychotherapeutic model that's provided through this to patients. It's a combination, protocol plus [ medicine ] really important. But with that one experience, we've seen in prior studies, 3, 5 weeks, 3 months and beyond in terms of that -- the effect. So this durability is really interesting, but the variability of durability is also a real question. So what are we aiming to do? We're aiming to understand which dose. We're aiming to understand who responds, who may not, and who has the more durable responses, so we can characterize. Remember, transforming mental health care really requires that we look to the future, and the future in psychiatry, just as it is in many areas of medicine, is to be predictive. First to have a precision treatment, then to be predictive and preventative of relapse. And that's what we're seeking to do at COMPASS. Is that helpful?

That's very helpful, which I think leads me to the next point. You've talked about obviously breaking new ground, changing treatment models. Clearly, there's going to be some very helpful data coming out before the end of the year and that will inform the Phase III design, as you've said. So maybe sort of 2 topics on that. What do you know about the Phase III today, if anything? So that's one sort of topic. And then the second one is looking through to the other side, in light of the groundbreaking experience and obviously the change in paradigm that you're envisaging, how are you going to commercialize? This is probably very different, as you say, from a model of an SSRI and a prescription. So maybe you could just share your perspectives around those 2 points.

Sure. So I think in terms of -- could you repeat the first question? I'm sorry...

I think the first one was around sort of Phase III and perhaps you'll need to wait for the data before...

Right. No, absolutely. So I think one of the things that really distinguishes us is my prior background was in regulatory innovation and really looking at the fact that regulatory approval is simply seeing a starting line, not crossing the finish line, and we really need to engage payers and regulators early in the design, and that's what we've done. And we continue to do. We've talked with regulators about different scenarios for our Phase III program based on different outcomes. Obviously, we need those data from the end of Phase II to finalize that. But I think we've had some very robust discussions, both with the FDA and EMA and soon MHRA here. So I think that program is taking shape. Obviously, it will depend on the results. It will look at most likely 2 large-scale studies, and the size of those will be determined by the results. The design will be determined by the results. But we're well on our way to discussing with regulators and getting their input on what this program should look like. In terms of the broader picture of what does this look like in real life? I think we've been really greatly helped by the work -- incredible work that J&J did around esketamine, some of the learnings that we have around that launch and roll out, building on some of the emergence of ketamine as another rapid-acting antidepressant. And here, I think one of the major differences is we have a single rather than a multiple dose induction process. So I think we're really interested in leveraging the infrastructure that's being built and utilized for ketamine, esketamine. There's another substance, so that has had a single Phase III trial. That's a similar psychoactive substance called MDMA, and that's going through produce of an amazing first Phase III trial. And we use similar infrastructure. So I think there's a new type of infrastructure that will be used. We see it in TMS. We see it in ketamine-supported administration of these episodic treatment. So I think that's what the world looks like. We never intend to build clinics. We do have centers of excellence that we're developing in the United States. We have 2 of them. We're working here with King's College and the NHS, and they have memorandum of understanding to create one in the U.K. And our model is really to develop ways to train the therapists who really give people a sense of what this can look like and to model the care model. And that's really been an important element. So again, we have strong data and digital components of what we're doing as well. So that's how we're focused.

Maybe one sort of follow-up on that. You've talked about leveraging what's being built around, esketamine, MDMA with the sort of similar model. Is there enough infrastructure today? Or by the time that you would like to bring COMP360 to markets, are more clinics and sort of more expertise going to be needed?

I think that, that is something that, yes, it will be. There's different types of infrastructure, obviously, and state systems here in Europe, different models in the U.S., working closely already with payers and providers about what that could look like. And again, so much of this will depend on our Phase II results. This is the first time that we have a really well-controlled, well-designed study. It's the largest study ever done with these substances that comes on the heels of the prior largest study done with healthy volunteers for our safety database. So we have an unprecedented database that will enable us to drive insight in terms of how this works, for whom, et cetera. So I think we have some time to work on what that infrastructure looks like, and we're already in those discussions.

That's great. I have maybe sort of 2 questions. One, again, sort of going back to the Phase IIb and how you've mapped up development. I know that there was an Imperial College study published recently in the New England Journal of Medicine. There were perhaps a couple of differences in terms of that study in the way that COMPASS is going about the development. Maybe you can comment on the similarities, the differences as you think they're relevant to the path forward.

Certainly. So this is an investigator-initiated study. So we didn't have any impact on the design. It was designed by a brilliant young researcher, Robin Carhart-Harris. And it was basically a mechanistic study where they looked -- were looking at brain scans and so forth as well as some outcome signals, if you will, comparing psilocybin as the first study using COMP360 that's been -- which is our medicinal product combined with therapy. That was the first time it was used and reported out. Obviously, it went into the New England Journal of Medicine because it demonstrated that from this early study, it was underpowered. It's again an IIS, but it's a signal-generating study. What we saw is that, in this case, 2 doses of psilocybin 3 weeks apart were numerically superior to psilocybin -- to SSRI, particularly escitalopram, the leading prescribed SSRI, on many different dimensions. And that gave us real interest and hope that our study will also yield positive results for patients. Now what's different? We're using 1 dose. And the reason we're using 1 dose is we do see variability and durability from prior studies. And until we know how that looks for which patients, it didn't make sense to do 2 doses. What's interesting to look at in the study that Robin Carhart-Harris did, a second dose was administered 3 weeks. Well, that's about the time our first primary endpoint is in our study. What did we see in that? Well, we saw a good separation between the 2, the 25 milligram and the 1 milligram dose. But we have to keep in mind the 1 milligram dose had daily escitalopram provided to people. So it was very different than our single experience with 1 milligram versus 10 or 25. So we expect the separation to be greater. We'll see what the data tell us. But it was a very promising signal. What also is super interesting for us, Cailin, was the fact that not only did we see really interesting measures of movements in depression, we saw indications of improvements in well-being. So not only are my symptoms -- negative symptoms addressed, but I also have a greater sense of well-being and participation in my life, positive affect. This is a real -- this holds this could be really promising for patients, their families and society.

Perfect. Maybe one other sort of related point. As I understand it, in your current study, the COMP360 experience is a sort of one-on-one with the clinician. Perhaps you can touch on how that might evolve going forward? I know we've sort of off-line talked about group administration. Just any perspectives looking into the future how things may evolve?

Well, I mentioned the history for a reason. These substances were used in the '40s, '50s and '60s. Actually, over 40,000 people participated in psychedelic case studies prior to the mid-60s. It's something people just aren't aware of. But that was before controlled studies. I think one of the things that we're really focused on is how do we take this model that was used in the '60s and make it fit for purpose in the 21st century? So many things have changed. In that time, it was 2 therapists, 1 patient. That obviously won't work given the huge unmet need we have. So we really had to take a different view and working closely with regulators on that, always putting patient safety first. So we are looking at how do we move from where we started even just 4 years ago, a Ph.D or a psychiatrist with another Ph.D or psychiatrist supporting a single patient. That really won't serve the huge unmet need. And now we're -- the FDA has agreed we can do simultaneous administration, if you will, with one-on-one support, and that person supporting received special training from us, but it could be someone with master's level training, a social worker, a psychiatric nurse, for example. So everything we're doing is looking at how do we match the scale of the problem, looking at how we leverage technology. So all of these things are a part and parcel of our development plan. But because we're evidence-based, let's generate the evidence and then look at how to progress this. We've had our first clinical trial, which will -- another IIS for MDD in cancer patients, we'll report out later this year. And that's actually the first FDA patient-facing approved study where we're actually, again, it's an IIS non-responder study, but that does use simultaneous administration one-on-one support. So we're always climbing this evidence ladder to create a scalable model for patients and health systems.

Perfect. I think you just touched upon it. One of the other things is looking beyond treatment-resistant depression. I think you've just talked about oncology. How are you thinking about the application of COMP360's psilocybin, which indications, how are you going to prioritize that and why?

Well, I think that there's a real push now that we have deeper understanding of circuits, mechanisms of action and perhaps even mechanisms of change. That maybe we realized there's some underlying processes that manifest themselves differently, perhaps different times and in different patients, perhaps different times in the same patient. And so one of the common features is that there is a rigidity of thinking, a self-focus and a negative attentional bias that we see in a variety of things, first and foremost, depression, but also anxiety disorders, post-traumatic stress disorder. And it seems that there may be a common underlying feature that psilocybin could be helpful. Certainly, our animal data, our preclinical data suggest this. You'll see it reflected in our intellectual property portfolio. So I think that what we're looking at is 2 things. One is where is there a logical premise that psilocybin therapy can actually help? And how do we address the areas of the highest unmet need, the greatest patient suffering? And that points us to things like anorexia, post-traumatic stress disorder, bipolar 2. A whole host of things that we're working on in investigator trials starting with signal generation. And the minute we have a signal, we're all over it in terms of bringing it into more rigorous trials. Is that helpful?

Excellent. Yes, that's super helpful. So I had a question from the audience, but it sounds as if you maybe be busy enough with psilocybin. I think one of our audience is interested in beyond psilocybin, are there other psychedelics that you think are incredibly promising, non-hallucinogenics? Is there anything else that you think you have your eyes on in terms of, after you've done everything that you need to do, which sounds like a lot, where next potentially?

Well, I think this is a very insightful question, right, because we started again, think about what we're about accelerating patient access. Psilocybin was a substance that enabled us to have the swiftest development program that would reach patients. So that's where we started. The infrastructure could be developed and leveraged by perhaps shorter acting substances. We have a relationship with the University of Sciences in Philadelphia; University of California, San Diego; and University of Wisconsin, where we're developing many, many new NCE psychedelic medicines with different properties. Those are all getting ready to go into screening and hopefully, we'll bring some of those into the clinic over the next 18 to 24 months. So we're really excited about that work. So it's not stopping. You can think of us first focusing on more indications for psilocybin and then looking at how the new medicines might come in and create a greater scalability for that. And that's a core part of our strategy.

We have about 5 minutes left. Obviously, I can certainly say COMPASS has been one of the pioneers in the space, but we're obviously seeing a lot of interest and a lot of new activity in terms of companies starting out. Maybe you can talk about, being one of the pioneers, what's different? What kind of stands out in terms the model, the experience, where you are relative, I guess, to the emerging build?

Well, I think one of the things, maybe a place to start, is what our principal investigators tell us. They tell us that they've never seen a trial that has had such high expectation going into it. The patients believe that somehow -- based on all the hype and enthusiasm in this area that somehow this is a cure. And so I think that this energy has really, really outpaced the data tremendously. And so when we talk about being evidence based, I think we have to look at this with great hope, but also with a sober mind and to really be doing the hard work. We've been at this for a long time, as you said. And I think the reason what really differentiates us is that we're doing the work, we're focused on a tremendously deep focus on our science, understanding not only mechanism of action, but mechanism of change, optimizing psychotherapy, focusing on digital phenotyping. Because what we have here, we have to prevent relapse. This is really important. Every time someone relapses, it's harder for them to receive care. How do you predict relapse? Our family members can do it, but our family members are paying attention to our behavior. What else pays attention to our behavior? These things. So how do we actually leverage other sources of data to be able to anticipate, predict and most importantly, prevent relapse? So the things that really distinguish us is we're not about the drug product alone. We're really, really looking about new models of care that allow us to work with payers and patients and health systems to actually improve outcomes and help people become less depressed or less anxious depending on what indications we're in, but also to stay that way. And I think this is really important. And we're very, very focused on that rather than any particular molecule. Obviously, we do all the hard work we need to. We're very enthusiastic about what we're doing, but we're really, really focused on working with health systems as a partner to improve outcomes.

And in terms of the position in the market going forward, what is creating the longer term, I guess, sort of moat around the company? Clearly, the relationships, the training, the very unique modality, how important is IP? Where do you stand? Maybe you can give us sort of a very high-level 3-minute perspective in the last couple of minutes.

So I think 2 things are really cementing our leadership position. Obviously, all the regulatory processes to be able to do trials, comprehensive trials with leading institutions. We're in 10 countries right now, 22 sites in our prior trial. It's an unprecedented scope in this area. That becomes a really interesting challenge for others to replicate, particularly as we go into a very comprehensive, much greater, larger Phase III footprint. So I think we'll become a partner of choice for many organizations who really can't or don't need to build that infrastructure. So obviously, we're very interested in looking at partnerships. Secondly, I think the IP component, we have 8 granted patents. Interestingly enough, some of those have been challenged pre and post issuance, very unusual. You can expect to feel like why that might have happened? But we've been very successful in maintaining our position. Obviously, we continue to advance that. This is a new chemical entity and our new active substance, which people may be wondering why, but it was never registered before. So that gives us regulatory approval or regulatory data protection. So there's quite a bit of work that we've done to really secure our leadership position for patients, our health systems and investors.

Thank you, George. Maybe in the last 2 minutes, I don't know if you have sort of any parting sort of messages for the audience. I think it's clear, certainly from my standpoint, as I said, this is a very topical area and a topical discussion, not least in light of what's been going on for all of us, quite frankly, and our family members who obviously sort of suffered from TRD and other related areas in the last 18 months in particular. Obviously, looking very much forward, as I'm sure you are, in terms of the data that will be reporting from your Phase study by the end of the year. Is there anything else, I guess, in terms of parting remarks you'd like to sort of leave the audience with?

I guess one of the things that's really important here is that everyone has a story in this area, and we've been dealing with stigma for a very long time. I think one of the things that a younger generation has enabled us to do is to actually start talking about this. And I think the link between mental health and physical health and the ability to actually start allocating resources to mental health, which will then cascade into physical health, which will then cascade into many parts of our lives, we have to do that better. And I think that everyone working in this area should really be -- feel comfortable and excited to tell their stories, to focus on this because there's nothing more important in our lives.

Thank you. Great, great, great closing remarks. So with that, I think we're bang on time. George, thank you so much again. Great to have you at our conference.

Great to see you.

And thank you, everybody, for joining.