COMPASS Pathways plc (CMPS) Earnings Call Transcript & Summary

Thank you. Biotech analysts here. We're very excited to have Kabir and Laurie representing COMPASS Pathways. Let me just get through a quick disclosure and then we'll jump in. Important disclosures: please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have questions, contact your Morgan Stanley sales representative. All right, so with that, welcome again. You're at a pivotal time in the company's history. NDA filing in process with rolling review. FDA actively working through module submissions, PDUFA timeline guidance with Priority Review, and launch guided for 1st half of '27. So, you know, with that kind of as the background, maybe for those less familiar with the company and the broader development landscape, I thought we could spend a couple of minutes just on your approach versus competitors and maybe how the team has more broadly progressed psychedelic drug development efforts. I know that's a lot, but...

Thanks, Judah, and thanks. It's great to be here and just our own disclosures. I will be making forward-looking statements. We will be kind of, please refer to our various risk factors. So, COMPASS was really founded to make psilocybin available through the medical model with broad and equitable access, and that's exactly the purpose we've been engaged on now for the last nearly a decade. One of the things that I think is key, and perhaps investors still don't fully appreciate, is the decision to go into Treatment-Resistant Depression. So we are working in a patient population with chronic recurring depression, a population that's really very different from an MDD population, where many other things have been approved. And that's a key point of differentiation and Laurie will talk more about that in a moment. As you said, we're in a great place right now. We are going to complete the submission in Q4. We have a National Priority Voucher. I'm sure we'll talk more about it, but really the agency is extremely engaged with us. One thing we have to acknowledge as the 1st likely psychedelic to be approved: we're doing a lot of the heavy lifting. So where we are going, others will come behind us. So when we talk about not only the way we've designed our trials, you'll actually see imitation is a great source of flattery. I mean, lots of other people have designed similar trials. Indeed, the FDA's own guidance for psychedelic trials really described our Phase 2. So we believe in many ways we have been pioneers of set the standard in this field. We're just very excited now to be within sight of the next huge milestone of potential approval and launch.

Okay, great. So maybe just a little bit more on the kind of that TRD versus the MDD landscape. Maybe just a little bit on the unmet need in TRD, you know, how the opportunity differs from MDD and you know really underscore, you know, what's the standard of care for these patients.

Yes, happy to. Right now there are currently 55 MDD-approved products being used on an annual basis. All of those are branded and they're all pricing at innovator pricing. TRD has 1, and that is Spravato, which is currently being used. And the reason that this is such an important difference to make is there are 4 million patients who actually are TRD. TRD is traditionally defined as the failure of 2 antidepressants. And so 4 million patients out of the 13 million MDD patients that are currently being drug treated is a very, very large patient pool of patients who only have 1 option currently indicated for. The difference between TRD and MDD in terms of being able to have this efficacy set that we have proven in this patient population is and comes down to payers. And so payers will, because this product is the only other 1 that will be approved at the time, will most likely cover us PAs to label, that is how Spravato is used today, and again, Spravato made $1.7 billion last year and only treated 100,000 patients. So there is tremendous pricing power potentially with payers and having efficacy in this patient population specifically.

Okay, great. And you mentioned the Phase 3 trial could be, or maybe, it says briefly here, but maybe just describe the Phase 3 trial.

design, right? There were 2 trials here. There are differences in design between both of them. So COM-006 versus COM-005, maybe the various subcomponents and, you know, what you were hoping to learn from each of those, and then we'll we'll get into the data. Absolutely. So COM-005 was 2 arms, single dose of 25 milligrams against true placebo. And that was really designed as a safety study, and the dialogue with the agency was around truly establishing a safety baseline. And again, remember, we were the 1st psychedelic to enter Phase 3, so that was part of that dialogue. COM-006 is the same 3 arms that we used in the Phase 2B. So the 25 milligram, which we believe was the active dose, 1 milligram replacing the placebo, so not an inner placebo, but something that would have some potential subjective effect, and then 10 milligrams chosen as an intermediate dose, which 1st in a fully naive population, would actually help from a blinding and confounding perspective, but also, we know the agency likes to see a clear dose dose response to show that this truly is a drug effect, so that was the other part. And that is 2 fixed doses 3 weeks apart. Primary endpoint in both 6 weeks. Also both running fully blinded to 26 weeks, which is I think unprecedented in depression trials, but certainly pretty unusual. So we really knew even though we designed these trials before the FDA issued their draft guidance, the durability was going to be key, not only from a regulatory perspective, but as we'll come on to discuss absolutely from a commercial perspective as well.

Okay. Okay, great. So with that in mind, maybe we can walk through kind of key learnings on both safety and efficacy from the Phase 3 program. I thought we could touch on MADRS reductions, responder remitter rates, and safety specifically, but help us with what has resonated most with practitioners as well.

Yes, so I'll briefly touch on the data and then hand to Laurie to talk about how we see that translating into real clinical and commercial practice. So in both studies on the primary endpoint, highly statistically significant results, we saw a separation of just under 4 points in the change from baseline on MADRS. Again in this population, and again just to perhaps belabor the point of this Treatment-Resistant Depression population, the typical, the average duration of the current episode of depression was 3 to 4 years in our trial. So this is truly a population that, while to enter the trial had to have failed at least 2 antidepressants in the current episode, typically over the course of disease had tried multiple medicines and really nothing else is working, so very much a chronic refractory population. That just under 4-point MADRS difference is highly comparable to Spravato in a similar population. What's really important, though, is we saw rapid onset. So if this drug is going to work, you will know within 24 hours. We saw with 1 administration roughly a quarter and with the 2, 3 weeks apart, 40% having a clinically meaningful response and then what we see is with an additional dose, either 3 weeks apart in COM-006 or at a more variable time point in COM-005, we actually see durability all the way extended out to 26 weeks. So what you're seeing is a combination of very rapid onset, durability from 1 or 2 doses, now supplemented by the 52-week data, from COM-005 where we actually see that a potential 3rd dose also has the same efficacy as a 1st or 2nd dose and extends durability out to a full year. So that combination of rapid onset, durability, limited dosing is remarkable from an efficacy perspective and it's generally safe and well tolerated. I mean, the vast majority of adverse events are transitory and resolve on the day. They are day of dosing, nausea, headache, some fatigue. Not surprising, this is a fairly intense experience on the day for a patient. But overwhelmingly resolved within the 1st day or 2. And moreover, we see on repeat doses and so on, we actually see some potential trend towards lessening your symptoms. So I'll now hand to Laurie to translate that into what that means.

Sorry, that was a lot. There are team members in here of mine who can attest to this, but when I 1st saw our data represented in a graph form, I almost cried. And I mean that literally. These are a very, very sick patient population. These are Treatment-Resistant Depression. By the sheer definition, they have not had efficacy on other products, and they are in a severe state of depression. What our trials showed in both COM-005 as well as COM-006 is that these patients saw a dramatic drop in their MADRS within 24 hours of their day of dosing, 24 hours. And as Kabir said, the average duration of depressive episode for the patients that went into this trial was 3 to 4 years. Can you imagine living your life 3 to 4 years depressed and then you have this 1 treatment and the very next day you feel better? I feel better. That's why I almost cried. What made me have even more tears was the fact that we were able to see what we were able to see achieved with actually in a COM-006 with an additional dose or a COM-005 with Part B. That durability lasted out to 6 months. This is contrasted against, again, the only other product approved for Treatment-Resistant Depression where these patients have to go in at least every other week to maintain their efficacy. And this has become a very highly burdensome paradigm, treatment paradigm for patients and their caregivers because Spravato patients have to be driven home by a caregiver. We will have to be driven, our patients will have to be driven home too, but that is contrasted, you know, versus, you know, 1 or 2, maybe 3 times in a year, versus 52 times a year.

Maybe just spend a minute. You know, we hear from time to time that, you know, MADRS is great for a clinical trial setting, but it's not the most relevant endpoint for a practitioner. So responder remitter rates, I guess, have those stood out more for clinical practitioners and maybe just, you know, frame those for us.

Yes, so I think you're absolutely right, and physicians aren't typically taking a MADRS score. Response and remission is important, but typically a psychiatrist takes a more holistic view of quality of life and so on. Yes, so what we saw in COM-005 was remission rates were around just under 10%. Full response rates were around 20%. We saw that improved in COM-006. What I think is really exciting is what we've just seen in the 52-week data from COM-005, which is now clearly open label but therefore much more representative of the real world. And there we saw across both placebo patients who were getting a 1st dose, or those on the 25 milligram arm getting typically a 3rd dose, you're seeing actually remission up in the 30s and 50% response up in the 40s. And to us, that's much more analogous with what you're likely to see in the real world where people know what they're getting.

OK. helpful. And then maybe just back to dosing frequency, right? You know, like you said, patients have gotten 1, 2, or 3 doses. Just, I guess, better contrast that to Spravato, whether it's in the 1st year.

or if patients are continuing? Yes, so let me start by saying what we believe our label will say. And so what we believe the label and the.

the dosing administration will say is 2 initial doses, minimum of 3 weeks apart, so analogous to what our COM-006 trial was. And that's very important because there are 2 things to think about, what we saw in COM-005 versus COM-006. If a patient responds after the 1st one, does not preclude, there's no reason why they need to take the 2nd one, the physician will make that decision. But we believe that the 2 initial doses does give a patient a much more dramatic and longer durability. And so the maintenance period, we won't say maintenance, but in effect what is contrasted to the Spravato label maintenance period, we'll say redosing upon physician discretion. And the commercial team will help educate sites and physicians on what to look for, what to expect from their patients. They'll get clinical experience. They'll understand at the time of redosing. We do expect the minimum to be somewhere between 2 and 4 annually, and I know that's 3 on an average. I I can't do math occasionally, but we do expect there to be somewhat of a range. And that is how we will price. So we can come back to that later, but that is what we're looking at. Spravato, by label, their initiation phase is 2 times a week for the 1st month, 1 time a week in the 2nd month, and then every week or every other week for a maintenance period forever. There is no end point. And so you have to compare and contrast what that burden is for a patient of either 2 to 4 days off of work, their caregiver days off of work, versus potentially 25 to 52 times in a year having to go in for Spravato.

And what you also had to recognize is because of that patient burden, in practice, few patients get beyond 7 or 8 months since Spravato. And, of course, you know, they are then not necessarily better. So that's a suboptimal treatment, both from a patient, clinicians, and importantly a payer's perspective as well.

The frequency of treatment also with Spravato does limit the radius at which patients can feasibly go. Go into a center and get treated on that frequency of the basis. When you're going in 2 to 4 times a year, that definitely opens up our radius of patient population.

Okay. And so maybe just on that point, maybe just walk us through the current Spravato infrastructure set up today, you know, why it could represent sort of a running start for COMP360, at the same time, what are some of the areas of confusion for investors in assessing whether Spravato and COMP360 are both attractive from a provider perspective?.

Yes, so I can answer both of those without directly answering both of those. Right now, there are 8,500 sites that are currently available to administer Spravato. And what that means is effectively that they are prepared to administer multi-hour treatments, Spravato being the only psychiatry pharmacologic product out there that is multi-hour. And it also is very important for me to note that a Spravato REMS-certified Spravato center is ready for COMP360. The rooms are the same. The staffing requirements will be the same. The getting a PA through REMS requirements outside of the hours needed for monitoring should be highly similar. And so there's nothing that the sites that are currently existing for Spravato needs to get ready for a COMP360, they're already ready. And so that I think is the fundamental miss from investors. On top of that, they have capacity. Spravato sites are growing at about 500 sites a quarter. And that's impressive, right? Spravato is a very good drug, but these sites are growing because they understand that psychiatry, particularly depression, has multi-hour products coming behind it. And so these sites are getting prepared to have multiple options. Again, the current sites are not at capacity and they have a very they're only treating 100,000 patients out of 4 million in TRD.

Okay, great. And then maybe just touching on the regulatory side, just remind us of your FDA interactions and designations thus far, your Breakthrough Therapy Designation. I think it's called a National Priority Voucher at this point. So how have those factored into level of communication with the agency and frequency?.

Yes, so you're absolutely right. We've had Breakthrough Therapy Designation since 2018, and now we received the National Priority Voucher in April 2024. So I think the 1st thing to say is through all throughout the development of COMP360, we've had a really good relationship with the Psychiatry Division. We were not the earliest to move forward, but there have been other companies in parallel as well. And I would say that the division truly has an appreciation of the potential of psychedelics. I mean, they have said publicly that between a 1/3 and a 1/2 of everything under review, is now psychedelic. So, putting it in context, we already had a high level of engagement. They were already putting out draft guidance and so on. With the National Priority Voucher, that really means 2 things. 1st, at the back end, there is the target of approving it once the submission is complete within 60 days, and that will be very nice to have at the back end. But I think much more importantly, it's led to a fundamental difference in the way the day-to-day interaction goes. We have got a rolling submission underway, and we also genuinely have a rolling review underway, because sometimes you had 1 without the other. But we are getting information requests. We're turning them around. We actually have a draft label already under review. The REMS framework is under review. We've already submitted the 8-factor analysis for rescheduling, and there are inspections happening as early as this week. So I would say that the level of engagement, interactivity, the lack of the formal bureaucracy and timelines that used to govern FDA interactions has been incredibly refreshing. At the same time, the division has been very clear with us that there is no change to the standards. Yes, they are going to hold us to exactly the same standards, they would ever have held any other psychiatry drug to, and we think that's exactly right. So we're very happy with where we're at. We will complete the submission in Q4. We honestly don't know if there'll be the typical 60-day acceptance. There could be, even though we've done a rolling submission and rolling review, and then we expect the clock to start with a potential 60-day. We do think they may still issue a 6-month PDUFA and beat it, but again, there are so few precedents to any of this at the moment, it's not quite clear.

Yes, great. So, you know, that could set you up for a launch, you know, I think you said as early as 1st half of '27. So maybe just give us an idea of how investors should think about adoption. What are key factors to pay attention to following potential approval? And, you know, I think you have said recently, you know, there could be a slow ramp out of the gate, but there could be some snowball effect as kind of experiences gain. So I guess what metrics should folks be paying attention to and what timelines should we be thinking about?.

Yes, so let me just reorient people to the timing of launch and what that might take, because I think that's very important to understand. As Kabir just alluded to, the timing of approval will be a little bit fluid. Hopefully, you know, that's understandable. And then the DEA needs to reschedule, because this is a Schedule I product, they will need to federally reschedule it. And given the executive order, that could be anywhere from 1 day to 90 days after approval. Again, we're doing everything we possibly can as a company to make sure that that's done in an expedited fashion, but it really is out of our control. What is in our control, though, is to making sure and helping states reschedule as well, because after federal reschedules, the states need to reschedule. And so once the states come online and reschedule, we can then legally ship as well as physicians can legally prescribe the product in their states. We've done a tremendous amount of work over the past 2 years to make sure that as many states as possible are intending to reschedule within 30 days after federal. And right now, 93% of the population lives in a state that will reschedule within 30 days, and we're continuing to do work. So by the time we launch, that number will inevitably be higher. And the reason we're thinking about a slower launch is not because of demand. We have almost, you know, unheard of demand from not only excitement from physicians but also patients and patients that we're speaking to. We're not concerned about demand at all. What we are concerned about is making sure that sites get reimbursed and they have no reason not to prescribe and that they are well prepared to administer the product and we are very focused on making sure patients have a good experience. We know that fundamentally if those 2 things go wrong, our launch will derail pretty quickly. Not only that, we will derail it for the entire class. So we're taking that very seriously. And so we're going to spend a lot of time making sure that sites can get reimbursed appropriately. So a little bit of hand-holding, white-gloving it, if you will, more rare disease type, making sure that sites are adequately prepared and that reimbursement is not a hurdle for them, as well as making sure that patients are well-educated and prepared. So that inevitably may mute the launch a little bit, but once these sites get clinical experience, they know they can get reimbursed for the time that they're spending, as well as the product can get reimbursed for the patient, that that should should skyrocket pretty quickly.

Okay.

Exactly. And we also think that word of mouth, peer-to-peer, both at provider and patient level is going to be critical here, which is why those early experiences need to be positive.

And how are you thinking about REMS, I guess, relative to Spravato? You know, presumably monitoring time would be different, but anything else you'd highlight?.