COMPASS Pathways plc (CMPS) Earnings Call Transcript & Summary

All right. Welcome, everyone. Let's go ahead and get started. Sorry for the slightly late start. I will make up for it on the back end. My name is Vikram Purohit. I'm one of the biotech analysts with the Morgan Stanley research team. Happy to have with me the team from COMPASS Pathways on the stage here today. Before we get started, I just need to read a brief disclosure statement. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. So with that, let's go ahead and get right into it. So I have the full team here with me today and lots to unpack on the space, on your pipeline, on upcoming data readouts. But Kabir maybe we can just start with a brief overview of COMPASS Pathways, the science you're trying to leverage here and just kind of where you see COMPASS in the space of psychedelics. That's probably the best place to start, and then we can get into specifics from there.

Sure. No, happy to do that. And just a reminder, you should refer to the risk statements for us as well. Everything, we will make some forward-looking statements here. So COMPASS Pathways is focused initially on the development of COMP360, a proprietary synthetic form of psilocybin. And based on a lot of evidence that was generated clearly some a long time ago and then starting again in the 2010s and so on, we are developing this initially for treatment-resistant depression. As a reminder, this is a very high unmet need where, until the approval of esketamine, no drug was approved. Roughly, a third of all patients ever diagnosed with MDD will end up requiring some sort of treatment for what we call treatment-resistant depression. We are currently in Phase III, 2 large Phase III trials, which I'm sure we're going to discuss in more detail, with readouts expected over the course of the next year or so. And right now, given what has happened with Lykos, and again, I'm sure we'll address that during this morning as well, we clearly are positioned potentially to be the first company to launch a classic psychedelic. Esketamine is approved but we, as COMPASS, are positioned to be the first to launch a classic psychedelic. So we can talk today both around the development strategy and what we are doing with that, but also how we're thinking about commercialization and how we build on the inroads that Spravato has made, but also the need to develop really a tailored infrastructure for COMP360.

Great, great. Kabir, since you did bring up the topic of Lykos, I know it's a topic on many people's minds when they think about the psychedelic space. They had a bit of a challenging AdCom and then a negative decision on their filing for their MDMA assisted therapy in PTSD. Taking a step back, what do you think that means for this space of psychedelics? What do you think it means for regulatory prospects for other therapies that are going to be entering the space like COMP360? And what does it mean for the COMP360 TRD program, if anything, in your view?

Yes. So I'll start at kind of high level and then pass to Guy to talk in more detail around the specific implications. So I think at a high level, the key thing to remember is that MDMA and psilocybin are very different drugs. MDMA is a drug, which it's not a classic psychedelic. The effect on a patient is to open them up emotionally and make them, frankly, garrulous and loquacious. On MDMA, you talk and you therefore require interaction with the therapy to get the benefit. And indeed, Lykos were clear that they were applying for MDMA-assisted therapy with MDMA as a catalyst, so the drug therapy combination. Psilocybin operates completely differently. It's an inner directed experience. It's a classic psychedelic. There is actually very limited interaction with the person in the room. And therefore, we are very clear that what we are demonstrating is the effect of the drug, psilocybin, with psychological support only. So I think that fundamental difference is absolutely key to why our trajectory is different, but I'll pass to Guy who clearly can talk much more about the actual design and execution of the trials, which were also some of the issues that came up.

Yes. There were a couple of things. The first is the interpretation of placebo versus a highly psychoactive drug, and that occupied quite a lot of the discussion. Not always fairly in my opinion, but nevertheless, it was clearly an issue. We have thought about that in advance of our Phase II study, and we used the comparison with a different dose of psilocybin as our primary outcome. And we think that's still actually the most valid way of determining efficacy, effectively looking for a dose response effect rather than a difference from placebo because of the unblinding. So I think that was the first kind of scientific message. And I think in fairness to Lykos, they explained that they found it very difficult to find a comparative dose because it produced adverse effects, et cetera. So there were reasons. The further issue is this whole problem of if you're adding a drug to a psychotherapy, you have to specify what that psychotherapy is. We are adding a drug to a preparation, and we think that's always probably going to be essential with classical psychedelic. You can't just bring people in and say, "We're not going to tell you what's going to happen, but it's going to be very exciting." You're going to have to tell them really in some detail what's going to happen. So in a sense, you have to give them information, which is potentially unblinding. We don't think there's a way around that. But at the same time, one must be completely consistent in the way that information is transmitted, but you have to train the therapist not to do therapy, but to be essentially coaches to the patient. And then in the integration session that follows the treatment, you've got to keep an absolute -- you've got to be very, very clear that this is an information seeking from the patient. You are not trying to drive a therapeutic model. And I think with that lesson from the Lykos confusion, we will be in a good position to document exactly how we have delivered preparation, support on the day and then the integration phase that is -- that follows the administration of the drug. So I think those are the main clinical things. There are technical things in the dossier that was submitted, which we have anticipated the need for more detail, I think, than possibly Lykos did, but that's for another day in a sense when we actually submit our dossier.

Got it, got it. Okay. That's helpful. Taking a step back and discussing the space a bit more broadly then, I know that there are some investors that still see a good amount of stigma associated just with the space of psychedelics. But I'd be curious from your perspective on what level of stigma, or lack thereof, you glean when you work with centers, when you interact with PIs at sites that are participating in the COMP360 trials or have participated in the past in terms of what sort of physician readiness do you see to use a psychedelic therapy like COMP360, if it's available for their patients.

Yes. Well, I don't think the physician readiness is limited by stigma. I think what you see is great interest and curiosity and, of course, the idea that this might be game-changing for psychiatry, which particularly for younger psychiatrists is something that's very exciting to hear. That said, obviously, the issue is how you deliver this, and maybe we're going to move on to the whole issue around commercialization. That, I think, is something we -- where, clearly, the doctors that we talk to who have not actually used the drug or have questions that they want to ask how is this going to work in my clinic, and we are addressing that as far as we can in advance of approval by working with sites who are specialists in providing interventional psychiatric care. Because this is not going to be available in your standard office psychiatrist setting. It's going to have to be more specialized, we think, at this stage. And clearly, we're working with those specialists to determine just exactly how it's going to be delivered. And I think once we have a clear understanding of that, then we will be able to allay the concern of both investors and, indeed, clinicians about how we're going to deliver this in practice.

The only thing I would add to that, I think, psychiatrists actually do recognize that we are conducting very robust, large studies as well, but there is no attempt by COMPASS or, indeed, the other leading companies in the field to take shortcuts just because this is a psychedelic. So I think that's also really important. And first of all, they want really good evidence. I think they believe that we are going to generate that.

Understood, understood. Okay. Maybe that's a good segue then to talk a bit about the Phase III program for COMP360 and TRD. You talked about it a little bit at the start of your opening remarks, but just to level set for everyone, could you remind us what's included in the Phase III program? And just kind of give a quick overview of the design of the 2 studies, and then we can go into more detail from there.

Yes, sure. Well, there are 2 studies. One is a placebo-controlled study to compare placebo with 25 milligrams. These are essentially the same TRD population that we studied in Phase II. They will be assessed in many ways, similar to the way we did in Phase II, and that is blinded rating and a follow-up, up to, in fact, 26 weeks in the blinded phase, which is a very unusual, I would say, groundbreaking approach to this, but crucial to demonstrate durability of effect. The reason we chose placebo is that we essentially were guided to that because the FDA, in particular, want to see a safety baseline. And really, you can only get a safety baseline with placebo. If you compare 2 doses of psilocybin, you're potentially giving yourself an advantage. So that's the reason we have to do it. But there will be questions around unblinding, which we are trying to address in the design as well, but that's maybe a little bit too detailed. The second study essentially tries to replicate the Phase II finding of the difference between a low dose of psilocybin and a high dose. But this time, we'll be using 2 administrations. And we have reason to think that, that may be a more effective treatment. So we have higher numbers of patients in response and remission. But essentially, it's the same outcome of 6 weeks that we're measuring in both studies. And then again, we're following patients blinded up to 26 weeks, and that particular feature of the design will give us a very clear steer on durability, which is something that's been requested. Finally, to make the trial more attractive to patients, because in Phase II, patients, if they got the low dose or if they didn't respond, there was nothing else we gave them, in this study, patients will be eligible, both for retreatment in the blinded phase and also for an open-label full dose in the third part after 26 weeks. And we know from talking to clinicians that that's a more attractive offer as far as they are concerned and as far as the patient is concerned. So that's helping the recruitment of both studies.

Great, great. So on the topic of the primary endpoints then, so COMP 005, obviously, you're looking at the difference between the 25 mg dose and placebo. And then with 006, you're looking at 3 different dose levels. For 006, what are you powering for an effect size? Are you looking for defect size between the 25 versus the 10 and the 1? Or is it just the 25 and 10 versus the 1?

There's a hierarchy of tests that we're doing, but the first, the #1 comparison is between 25 and 1.

Got it. Okay. So when people think about how to best interpret those data sets, when both studies have read out, just talking about the 6-week primary endpoint data at this point, what should people be thinking of as success, both for 005 and then also for 006 comparing the 2 active doses?

Well, I'm afraid success in this area is measured by the P value essentially, and that really just says -- it tells you how likely this result has arisen by chance. And if that's a very small number, you can believe the result. The real question, I think, you're implying is how we interpret the size of the effect, the strength of the effect, the clinical effect. And although you can sort of make an argument about the comparison with placebo, we don't have a lot of experience with placebo in these treatments. It's much more with repeated giving placebo because people only get placebo once in our design. So I think what we're going to be much more interested in is the number of patients who show response and remission and how durable that is over a period of time. And I think in communicating the significance of the result, that's going to be the cut us with permissions, and it's going to convince me. So that's the way we do think about it.

Okay. So response for remission data. And what have you disclosed in terms of the stats for both studies? Have you disclosed the effect size that you're powered against?

No, we've not been very clear about the details. We felt that was our business, and we were confident that we're powered in a way that is logical and is conventional in many ways.

Yes. And one thing I would say is in -- while the Phase IIb was primary endpoint of 3 weeks, the difference between 25 and 1 was significant at 6 weeks. That's published in the New England Journal, so you could clearly take that as a minimum benchmark for what we'd be looking for.

Understood. Great. 006, you're looking at repeat dosing there as well, right? So what do you hope that repeat dosing leads to? Are you -- what are the key question you're looking to answer from the use of repeat dosing, both from a clinical perspective and then also from a commercial perspective?

Well, it's absolutely critical from a commercial perspective because it tries to work, if you will. But at the same time, we think from a clinical perspective, the feedback we've got from both patients to some extent, but particularly from PIs in 001 was that the second treatment may make -- the first treatment for some people didn't seem to be enough. And it may well be that the duration of the effect is what determines outcome. We don't really know that for sure. So this will go some way to answering that particular question. So I think it's important that we do this study. And as I say, we're going to be judged -- we also will be judged from the numbers of patients who get full remission.

Yes. And I think -- clearly, you can hypothesize that the second dose may increase response rates, remission rates and/or durability or any combination of those. And I think to build on Guy's point, there is a -- I think there's a general belief that for many patients, a single or potentially 2 doses of 25 milligrams will be active. Durability is a key question. So again, with the 1 or the 2 doses, the 26 weeks blinded, we hope to generate some really robust data and recognizing there's no such thing as an average TRD patient, but at least to understand the distribution of durability for patients in the trials because I think that's really important. And clearly, that's going to be really important commercially in terms of how we're positioned.

Right, right. And then from a safety perspective, I guess, what were some of the key signals that came out of the Phase IIb that you'll be looking for in detail from the 2 Phase III readouts?

I think the -- the issue is really can a drug make you worse as well as make -- will the drug make some people worse, while it's making most people better. And I think that is the key observation that we will be able to answer. And that, of course, is fundamental to the whole risk-benefit argument. And the only way you get to -- you get confident about that is by large numbers. And we've designed the studies deliberately to be large enough, I think, to give us some confidence about that question. And the particular issue that has come up has been suicidality, but suicidality is simply part of the depression syndrome. And it's really very likely to be a question of whether you actually -- some people get slightly worse after not responding to the acute treatment. And we will know whether that occurs on a reasonable -- with a reasonable level of confidence as a result of the Phase III study.

Understood, understood. And that point might be a good opportunity to talk a little bit about how you would see COMP360 used in the real-world setting, given some of the safety considerations that people might have for this patient population and then also potentially from just the nature of the treatment being administered. What is the infrastructure that a center needs to have from what you currently understand to be able to administer COMP360 and then care for patients after the administration?

Yes. So maybe I'll start with that, and then we can come back to Guy and talk about where we see this being positioned from a psychiatrist perspective and patient perspective. So clearly, it is most of a day that a patient needs to spend in the center. The actual duration of the experience with the 25 milligrams is somewhere in the 6 hours or so. Now again, we're breaking that down into kind of what is the truly intense period, what is the period when they're potentially coming out of it. But right now, it does require a dedicated facility for that. In the protocol for the trials per FDA agreement, there has to be a licensed therapist in the room. We do not believe, given that what we're offering is psychological support rather than therapy, but that needs to be the case in the real-world setting. But clearly, we needed to do a lot of work in the next 3 years to potentially move away from therapist to a much larger body of workers, such as psychiatric nurses or other people who could support the patient in the room. And indeed, outside the U.S., even now, we're able to use nurses in some countries in the clinical trial setting, and that's been very effective. So I think the work we are doing right now, though, and we've signed a number of commercial collaborations to do this, is really to understand in different settings of care, what it will take to have that physical infrastructure where a patient can indeed be in a room for that period of time, what stocking is required. And also as you're aware, we've actually already done work around the reimbursement for the time for that person in the room. So clearly, there is no exact analogy or precedent for what we're doing. I guess, Spravato clearly requires monitoring. It requires physical presence for an extended period of time, but it doesn't require the constant attention of a health care professional with psilocybin dose. So that's key for us, and that's the work we're doing now to actually understand what's needed and help to educate potential settings of care of what that is.

Understood. And then from the research collaborations you've entered so far, any interesting lessons learned? Any interesting findings you can point to on how best to deliver and administer therapy?

So there are. We've decided not to talk about it too much because I'm sure all our competitors would love to know what our learnings are and so on as well. But I think suffice to say, most of the places that we are working with, not all, the most are already delivering Spravato. So clearly, we need to understand what that requires and understand how we build on that, how we leverage that appropriately, while recognizing it's different. And so that's kind of where we are. And part of this is also just really now about understanding patient flows. It's for us to understand patient flows, how choices are made around how to treat patients with treatment-resistant depression. Some of the places we're working with offer TMS as well as esketamine. So again, it's kind of fairly granular information at that level. What we've said and what we intend to build because there are a number of these different settings is, shall we say, templates or training modules and things that we can then take to other similar settings of care in the future.

Got it, got it. Is it a fair assumption that the centers where you're establishing these collaborations and then the sites participating in the 005 and 006 studies, those would be the natural first points of heavy commercial use assuming approval? Or do you think it's going to be more broad-based right after that?

I think potentially it's more broad-based than that. Clearly, we do have a significant number of sites in 005 and 006 that includes a number of sites that can potentially scale for commercial, but it also includes clinical trial sites and academic centers that are not necessarily going to scale quickly for commercial. And there are other sites that we're not necessarily in yet that I think could also be. But yes, clearly, this is going to be somewhat concentrated. The typical psychiatrist, single practice or small group practice is not going to have the infrastructure to deliver COMP360 in the short term.

Sure, sure. Got it. Okay. And then on a related commercial point then, it might be too early to get into specifics, but just even from a high level of reimbursement, what do you think are kind of fair bookings of pricing people should be thinking about when they think about COMP360?

So the point I made earlier, until we know durability, it's very hard to actually get into that. But I think, clearly, the obvious comparator, shall we say, is esketamine. So we know that today, drug cost for esketamine is somewhere between $15,000 and $45,000 a year, depending on how many administrations a patient actually goes for. So that's kind of initial benchmark. Importantly, and I mentioned this earlier, we at COMPASS, we'll be selling drug and driving revenue from the sale of drug. We also know that it's really important that whoever is in the room, whatever level of HCP ultimately is supporting the patient through administration, that, that is also paid for. And that's the work we had already done some years ago with MAPS PBC, now Lykos, to obtain a CPT code that can actually track that because it's clearly important that gets paid for as well.

Got it, got it. Okay. Just taking a much bigger step back then. When you think about the TRD kind of treatment paradigm, let's fast forward 7 to 10 years, assuming that COMP360 is approved, it's been on the market for a number of years, between the generic options that are out there, between ECT, DBS, Spravato, where would you see COMP360 ideally fitting in?

I think I can see it becoming preferred to Spravato. I can see it being preferred always to ECT, frankly. ECT has a lot of complexity. People have to actually be anesthetized. It's a complex procedure, and it's not exactly had a great press over the years. I think the comparison with TMS is interesting, but TMS experience for the patient is a very intense one as well at the present protocol. So from a patient perspective, I'd be surprised if that was going to turn out to be a sort of preferred way of doing things. And that comes down to whether or not the Spravato comparison with psilocybin turns out to be in favor of psilocybin. My money would be on it being psilocybin not just because I work for COMPASS, but just because the comparative experience, the amount of additional visits that patients have to make knowing they basically hate to be in hospitals. And understandably, we're all potential patients, we understand that. So I think the idea that you have 1 or 2 treatments with serious durability, and we are yet to establish that, so let's not get ahead of ourselves. But if that were the case, and you have really serious durability up to 6 or even 12 months, that seems to me a very attractive offer to patients. And it's also something that we know from talking to clinicians, they find extremely rewarding to treat patients because of the quality of the response. You aren't just sort of holding people free of the worst of their depression, you're actually seeing a really full recovery. And that's something that is very exciting for the few clinicians who've had the benefit of seeing patients through over for a long period of time. And we're now talking about from patients from our -- apart from our Phase II. That -- this is now several years.

Right, right. I guess, on the topic of durability then, what is the most number of COMP360 administrations per year do you think would be realistic commercially and would be viable to the patient base you're thinking about, to the prescriber base you're thinking about? At what point does the value proposition start to become a little bit less compelling, 2, 3, 4, some other number?

So right now, I would say, but again, this depends clearly a lot on what 006 with the 2 administrations 3 weeks apart generates because that's the key question. But as we thought in the past about single administration, my own view is any durability of 3 months or longer would be a significant one. I think anything that you can make into quarterly. To the extent that there is any analogy, it's I guess the LAIs in schizophrenia. And even though they're not indicated for bipolar, they're all used in bipolar and so on. And again, what you see is as that paradigm shifted to 2 and 3 months, that was very effective for patients, have got a lot of take-up. The 6 monthly has been kind of less so, partly because in that particular patient population and chief physicians quite want to see their patients. But I think anything beyond 3 months, and we've said from what we know today, it's maybe between 2 and 4, yes, but again, until we generate the data.

Fair enough, fair enough. That's helpful regardless. In terms of the durability data, what do you think the FDA wants to see? How much follow-up are you going to be including in your eventual NDA filing for COMP360 from the 005 and 006 studies?

So that will be a matter of discussion with the agency. But just to make the point, both of them are blinded for 26 weeks. So you can assume that under any circumstances, that data would certainly be submitted. They run to 52 weeks. The remainder is open label. So it's going to be more from a safety perspective.

Got it. Okay. Beyond TRD, are there other indications you think could be interesting for COMP360 to explore? I know you've had different data sets out there already for the molecule. But whether it's indications you've had data for or indications you don't have data for where you think there's a mechanistic kind of rationale, what are some interesting areas to explore from the pipeline?

Yes. So that I think, Guy, why don't you take that, maybe start with PTSD.

Yes. We recently published the headline data -- well, we presented, we haven't yet published, in full the data for an open-label 22 patient study using 25 milligrams psilocybin COMP360 in patients with PTSD. These are patients who didn't have the more complex or complicated forms of PTSD from childhood adversity. So they were chosen as having adult traumatic experience, but they included people from the military, from the more usual civilian accidents and the assaults that caused PTSD. So they're pretty representative in many ways. They were severe, so they had severe scores on the standard measure, which is the CAPS-5. And this -- they showed a remarkably high rate of response and a very rapid response. Now there isn't a control arm, so we mustn't get ahead of ourselves on this. But it's a very promising finding. The speed of the response, the quality of the response, talking to the patients, we have very detailed transcripts of conversations with the patient after 12 weeks. And their experience and their accounts of what makes the difference for them are really very compelling. So I mean it's -- I found it a very exciting pilot study, which we would love to capitalize on. We have data in other indications, of course, like anorexia nervosa, which is a very difficult condition to treat. So it's valuable to know about it. Whether it's possible to develop it is hard to say in that indication. And of course, there's been a number of investor-initiated studies, for example, in bipolar II disorder and also now in OCD, which -- the results of which will be published relatively soon, that are very promising and interesting.

Understood. We have less than 5 minutes left. Maybe I'll turn to some kind of housekeeping questions that I know are top of mind for quite a few people. So 6 week data readouts for 005, 006 in 4Q '24. You mentioned it could be early '25 potentially, and then for 006 in mid-2025. What can people expect to learn from these readouts?

So this 6 weeks is the primary endpoint. So it's clearly that will be the key focus. That said, we've also been clear that these are running for 26 weeks blinded, so there will be a limit to what we're able to disclose. That's something that we're still considering to how much we will be in a position to disclose. But I think what we will hope that people will see is further very compelling evidence of the efficacy of this and essentially no new safety questions.

Got it. So it's going to be the 6-week primary, and then it sounds like some commentary on safety.

Potentially from a -- excluding an issue, as it will.

Yes, sure. Understood. For 005, you had earlier this year mentioned that there was a little bit of a lag you hit in just verifying patient diagnoses and that, at that time, caused a little bit of a delay with the timing of the data readout. How has that issue progressed? And what was the way you kind of had to deal with that issue?

Yes. So you're exactly right, and this is the issue with those. So this is treatment-resistant depression. So we require robust evidence that people have failed at least 2 antidepressants, including dose duration and so on. And those medical records are not easy to find in the U.S. in particular. So we actually contracted old-fashioned services where with patient consent, a third party actually went and collected all that on behalf of the patient from physician, from prescriber, maybe from dispensing pharmacy, from maybe more than 1 physician and so on. And that's been very effective. That has actually significantly shortened the time to collect those. And obviously, we're building on that. As those sites roll over into 006, that will also be important. But I think the thing I would say is part of the Lykos commentary just reconfirm that, making sure we have the right patient population, making sure that we are very strict on this criteria of no previous experience for 85% of the population and so on. The fact, we have more time and effort really in ensuring that as a result. So that's what we did. And as I said, we put those third-party resources in place, and they will be in place now for 006 as well.

Understood. Great. In closing, maybe Lori, we can turn to you. So from a cash perspective, from a run rate perspective, could you remind us kind of what the company's current financing position is, what your runway is? And what kind of level of pipeline development is contemplated in that runway?

Yes. So we have said that we've got a cash runway into 2026. That primarily is funding this lead program in TRD and through the Phase III trial. So the PTSD data that Guy had talked about, while we find it very, very compelling and we think a really good extension for this product, that is not currently contemplated in the runway in terms of progressing it to a later stage trial. We are doing some internal work with our existing internal team, advisers externally to figure out what the right protocol could be. So we're progressing it as much as we can at this point, absent starting a later-stage trial for that, that is something we would like to do upon further financing. And then both internally and externally, just expanding beyond COMP360. So we do have early stage development work within COMPASS to provide next-generation compounds. And then we have developed a lot of really important capabilities in terms of late-stage development, commercialization, that we could become a really great funnel for additional compounds in the future. So right now, our primary focus is on TRD, making sure that we get these Phase III trials across the finish line, but we are doing some additional work expanding beyond that where we can within our resources right now. And we would need additional resources to go further with that.

Great. And then beyond COMP360, then I'm glad you brought up the point. Is it possible to learn more about those compounds in 2025 maybe?

Yes, I think we -- actually, we have been discussing that internally in terms of the best time and chance to do that. Really interesting work and really great capabilities internally in terms of a pipeline within COMPASS to expand. So absolutely, we'll be talking about that more. And as I mentioned, right now, our focus is really on TRD. But we've got a lot of great work happening inside to really build this into an expansive company going forward.

Great, great. With that, we're actually at time, so we'll go ahead and close out. I know a lot of topics that we covered in pretty short order there. So thanks for making the time. Really appreciate it. Thank you, everyone, for joining. We'll go ahead and close out.

Thanks.

Thank you.