COMPASS Pathways plc (CMPS) Earnings Call Transcript & Summary

Thank Okay. All right. Let's get started. Good morning, everyone. I'm David Huang. I'm the Senior U.S. Biotech Analyst here at Deutsche Bank. So I'd like to welcome everyone to the second day of our second annual Deutsche Bank Healthcare Summit. With us here, we have Compass Pathways for a fireside chat. So, Compass is a pioneer in the field of psychedelic medicine with its psilocybin therapy, COMP360, on track to becoming the first classic psychedelic to potentially reach the market in 2027. I'm joined by Lori Englebert, Chief Commercial Officer, Therese Loxam, Chief Financial Officer, and Dr. Steve Levine, Chief Patient Officer. So, thanks to you all for joining us. I'll pass it over to the Compass team for some introductory remarks to help level set everyone. And for those in the audience who may be less familiar with the Compass story, before we dive into Q&A.

You want me to start? We're going to be passing it back and forth throughout today. So, thanks for having us, first of all. Really appreciate being here. We'll likely be providing some forward-looking remarks, so because our lawyers are always interested, check our risk factors. But we are, as David mentioned, in the lead in terms of psychedelics, potential, getting to market. We're in really, really good shape. We've completed two Phase III trials, both being highly statistically significant, really great results, and really incredible profile that Lori can talk more about as to why we feel like COMP360 is so differentiated. First indication is that for treatment-resistant depression. We are also underway with a late-stage trial in PTSD, which will be a follow-on to TRD. We are in a rolling submission and review right now with the FDA for our TRD product, completing that submission in the fourth quarter. And we have guidance out there that we expect to launch within the first half of next year. So, we are really on the doorstep here of bringing our synthetic psilocybin product to market and really excited by the progress. We have made tremendous progress, not only from a clinical development perspective, but also on the commercial side. And the only product right now that's out there approved for TRD is Spravato, which is a J&J product. And we are able to leverage a lot, if not all of the work that they have done in launching their product for COMP360. And so both Lori and Steve, Steve can talk more about that. But we're in really, really good shape, really excited to bring this product to market.

Great. Well, thank you for that. So maybe to begin, could you walk us through the sequence of events going from the completion of the NDA filing for COMP360, which I believe is expected to occur in Q4, from there to potential commercial launch in the first half of 2027, as you have talked about? And really, what are your estimates, I guess, at this time in terms of FDA review, DEA rescheduling, and state rescheduling?

I'll take that one. We spent a lot of time together, so we're probably going to be figuring out who wants to answer which question each time. So right now, as we've previously stated, we intend to complete our NDA filing in Q4. And just to level set, in 2018, we received Breakthrough Therapy Designation, but most recently in April of this year, we received the Commissioner's Priority Review Voucher, and we also were potentially benefit from that, from the Executive Order on DEA. We also had an agreement with the FDA prior to receiving the voucher to undergo a rolling submission and rolling review. This is something that the psychiatry division, to our knowledge, has not done, at least in the recent history, and so we would have been the first product to benefit from a rolling review. Then we received a Priority Review Voucher, which did two things. What that did is it increased the frequency of conversation with the FDA, and then it also allowed the FDA to have a target review time of 1 to 2 months. So once we complete the NDA filing in Q4 of this year, what we anticipate is a little bit of uncertainty in terms of timing of approval because the FDA does clearly state a target of 1 to 2 months. We do not know if they will take the 60 days to do an acceptance period and then the target 1 to 2 months, but certainly we are prepared even if they don't. Once we receive an approval at some point in a very short proximity after filing that NDA, in Q4, the DEA then needs to reschedule because this is a Schedule 1 product. Right now, the DEA is by statute supposed to reschedule a product, and approved medical use within 90 days. And so the Executive Order back in February asked the DEA to work in a timely fashion for psychedelics. And so there could be a potential to shorten that timeframe from 90 days after approval. Then the states need to reschedule, which we've done a lot of work to prepare the states to reschedule within 30 days after DEA. And so all of this to say is we don't have a real good answer of when a potential launch will happen, but we feel very certain that it will happen in the first half of 2027.

And how should we think about the label language that you're likely to receive for COMP360? And I'm just thinking of how the product was studied in clinical trials. So for example, when you expect the label to discuss things such as induction dosing, whether it's 1 or 2 doses, and how frequent can you redose in terms of maintenance?

Please, you want to take that one? Yes, I'll take that one. We expect a fairly broad label to essentially say for the treatment of treatment-resistant depression. As far as the dosing, we have studied up to 4 doses in a year in our COMP-006 trial. There were up to 3 in the 005 trial. And we looked at an initial dose in 2 different ways. One was a single initial administration in 005. That was our placebo-controlled trial. In our three-dose low, medium, high 006 study, we looked at 2 initial administrations 3 weeks apart. What we have seen from that study with the 2 initial doses 3 weeks apart, as well as from the Part B data, the blinded Part B data from the first study, where that second dose was given a bit later, typically between weeks 10 and 14, for many participants there was a significant additional benefit of having a second dose. Ultimately, we think that that will translate into a label that may talk about initiation of treatment as 2 doses no sooner than 3 weeks apart, with additional treatment at clinician discretion or as clinically indicated. And that will likely be a clinical decision, truly, because this is a heterogeneous population. One thing we showed in the Part B section of both studies was a breakout of cohorts by initial level of response. And you can see the trajectories of those patients, where some just 24 hours after that first administration are in remission and then may not need another administration for quite some time. Whereas others have received up to 3 or 4 doses over the course of 52 weeks. And so ultimately, we would expect in the real world patients to have treatment on a frequency of 2 to 4 times per year. One thing that's important to point out with that is that currently the only pharmaceutical product that is approved in this population, treatment-resistant depression, which is a very different population than MDD, for which there are 50-plus approved products, is that only approved product is Spravato, which unfortunately does not have significant durability. And so it is administered typically on the order of 25 to 50 times per year, which places tremendous burden on both patients and their caregivers that need to drive them to this treatment. So, regardless of the final nuances of that label language, it will indicate that this is a treatment administered on a scale quite different from what is currently available to these patients today.

Do you have any expectations for how the REMS program might read? And given how we know what Spravato's REMS program looks like, do you think there would be a similar patient monitoring requirement?

Yes, I'll keep going here. Um, first of all, and going back to some things already mentioned about the cadence that we've had the opportunity to engage with FDA, starting with our Breakthrough Therapy Designation back in 2018, certainly more recently after they aligned to a rolling submission and review, and now with our Priority Review Voucher, we've really had the opportunity to have a very engaged dialogue with the agency. And it has been very productive and constructive. As part of that, they have guided us in terms of their expectations for REMS to look at the existing Spravato REMS, as well as what they prepared in their briefing materials for Lykos a few years ago, which is very consistent with the Spravato REMS. And so with that, we do expect a REMS that is very comparable to Spravato, which fortunately has not been onerous to these sites. We believe that those who are delivering Spravato today will deliver COMP360 when approved because it is exactly the same infrastructure, same rooms, same staff. They're already used to working with the REMS that we expect to have for our product. The key difference just being the length of monitoring time required. For Spravato, it's 2 hours. For us, we expect 6.

Okay, great. I'd like to pivot a little bit now to the commercial launch picture. So can you talk a little bit about what you've been doing with interventional psychiatry clinics to prepare them for the launch of COMP360? I believe there's about 8,000 or so clinics of this nature out there. Which of these clinics would you be targeting at launch and how do these clinics think about integrating COMP360 alongside their current offerings, whether that be Spravato or TMS or something like that?

So Steve and I will probably tag team this answer a little bit. So you're correct. There are about 8,000 sites right now that are currently capable and certified to administer Spravato. What that effectively means is that they are certifying that they can administer multi-hour treatments with Spravato being a multi-hour treatment. They are growing, these sites are growing at about 500 sites a quarter. So whereas there were about 8,000 now, by the time we launch, if that trajectory continues, there will be quite a few additional clinics that will be prepared to administer multi-hour treatments by the time we launch. Um, this has been pretty remarkable growth. Um, and these sites are growing because they are growing in anticipation of additional multi-hour treatments coming to market. And Steve can certainly talk to you how that is good for business for these sites. Right now, given where we're at with the sites that do prescribe Spravato, we're already thinking about what our Salesforce would look like. We've already started our Salesforce hiring to make their offers contingent upon approval, which they will cover all of these 8,000 sites. But most importantly, they will also cover referring physicians. So those physicians that are surrounding outside of these interventional psychiatry treatment centers to make sure that physicians who have treatment-resistant depression patients in their practice understand what the opportunities are for new products coming to market. And in terms of what we've already been doing with these sites, I'll hand that over to Steve to talk about some of the work we've done there.

Thanks, Lori. I mean, first, we know these sites intimately and the space intimately. And I don't say intimately like in a weird way, Yes, you do. I say it from, yes. First, you know, a few words about my background prior to Compass. I've been here 6 years, but prior to that, between 2010 and 2020, I was leading a national network of mental health care delivery sites that operated coast to coast in 10 states, that were the first examples of this type of infrastructure. That bringing that into Compass, not only understanding that business, but also many of the other sites that have opened in the period of time since then. We have done extensive work through a network of strategic collaborations, which is something that we put together. It's a bit unique. These are live sites of care currently taking care of people living with treatment-resistant depression that span the gamut of where they receive their care from community behavioral health to hospital systems, integrated models, decentralized models and others, but also including the top examples in the country of interventional psychiatry, as in the highest volume prescribers of Spravato today. And through information exchange over the past few years, it's really given us a very valuable opportunity at a very granular level to understand the challenges and opportunities of implementing new treatments within these sites, but also to realize, which is probably fairly obvious in the first place, that they did not build their sites to be Spravato clinics. They built them to be platforms to deliver all of the approved available options that can serve this population. Because number 1, they recognize that there are unmet needs and they need new options for their patients. Number 2, it's healthy for their business. And so 1 of the reasons why we see that there is a lot of capacity in these sites now already is because they understand that COMP360 will be coming and other treatments behind us, and they've been building that capacity ahead to be ready. Additionally, 1 other thing maybe to mention is that apart from understanding them through our strategic collaborations work, we've also had a medical science liaison team out in the field for the past few years, meeting with all of these sites as well, having scientific exchange, answering their questions about our data.

Great. Well, thank you for that. I want to get even a little bit more granular here in terms of how practice economics may play out. And I'm specifically thinking about billing and reimbursement and things like CPT codes. Do you expect that this will be a buy and bill product and are the codes in place essentially to help ensure favorable practice economics?

Yes, that's me. Yes. I mean, first, you know, although it's not typical for a biotech or pharma company to be thinking about provider-side economics, and ultimately it's not our role. It is important here because we are aiming towards broad and equitable access and we know if this treatment isn't viable economically for these sites, they won't write these prescriptions. And we did have a front row seat to some of the early launch challenges for Spravato largely, you know, multifactorial, but largely because of the lack of a reimbursement framework in place for these providers to get adequate reimbursement for the multi-hour monitoring in office. Specifically, J&J did not apply for new codes, and therefore it started off in a very confusing situation where various codes were being used, and in many cases not reimbursed. It's been somewhat ironed out over time, but ultimately they are not using codes that are specific to their products, and therefore, reimbursement really isn't optimized. We were able to take a note from that a few years ago. We applied for new CPT codes that are specific to the administration of psychedelic treatments in office. Those codes were approved. They are live in their Category 3 form and ready to be progressed to Category 1 with the approval of these new products. Additionally, you mentioned the buy and bill model. Buy and bill was brand new to psychiatry with Spravato. It has taken some time to penetrate probably about 35% to 40% buy and bill at this point for Spravato. It is a big revenue opportunity for the sites, frankly. And we also believe the coding strategy that we are taking with our intention to apply for a J-code after approval will also optimize the buy and bill revenue for these sites.

I wanted to touch on the payer side of the equation. Could you just speak to any interactions with payers, the feedback you're getting there, and then maybe if Spravato makes sense in terms of a pricing comp?

Yes, we have already started our exchanges and dialogue with payers. We did that after the 005-2017 6-week data. So we really could go to payers and start talking about them, what a product profile looks like and what the value proposition looks like. And so we've been doing that for the past several months. Feedback has been overwhelmingly positive. And the reason it's been overwhelmingly positive is because they have only 1 product that they are covering right now in treatment-resistant depression. And what that means is that there's only 1 product that has proven clinical efficacy in a patient population that does, unfortunately, cause tremendous disproportionate economic burden versus MDD to the healthcare system. And so when you can prove efficacy in a patient population like this, payers tend to react very favorably. Payers in particular have been reacting to the fact that this product works in this patient population specifically. This product works within 24 hours for those who respond. And if you take a look at some of the data that we've generated and that dramatic drop within 24 hours, this is a patient population that we studied that had been in their current depressed episode, their current episode for 3 to 4 years. That is a very long time to be depressed. And then you take 1 dose of COMP360 and the very next day you feel better. I'm way overgeneralizing, but that is effectively what is happening to these patients and payers are responding well to that on top of physicians, on top of patients, all that is great. The other thing that payers are starting to respond to is the durability of the products, not having to come back into the office to get treated again, a handful of times over the course of 50 or over the course of a year is also highly, highly interesting to these payers.

Bigger picture, how should we think about overall market opportunity here in TRD? And again, for reference, I have some numbers here with Spravato annualizing currently, I believe, north of $2 billion, something like $2.3 billion. And J&J, I believe, has guided something like $3.5 billion in 2028. How should we think about that overall market opportunity for COMP360, and maybe a follow on there. Do you expect that the majority of COMP360 patients would be sort of new interventional starts or would there be any major switching over, let's say, from Spravato?

Okay, David, we're on day 3 of conferences.

You're going to have to maybe remind me of some of these questions. My brain is fried. I will start with 1 question I didn't answer and the last one, which is pricing, because that does help articulate what the opportunity could be. And so right now, currently on average, Spravato is in the range of anywhere from $50,000 to $65,000 annually. And so we have, based on our discussions with payers, but also given the product profile and the value proposition that we're bringing, you can expect pricing on an annualized basis to be around that, pricing on a per dose basis. Um, so part of the reason why the 52-week data that we just released last week, which showed the benefit of having an additional dose after 26 weeks, really helped us to narrow in on what our average dosing on an annual basis is likely going to look like. Um, and we believe that will be somewhere in the 2 to 4 range, which means an average of 3. And so, but the reason I say 2 to 4 is not to be silly, but it is to articulate that there will be definitely patients that probably only need 2, and there will be patients that probably need 4. But the average will be somewhere in the 3 range. In terms of the opportunity, you are correct. J&J themselves are guiding to a $3.5 billion run rate for Spravato by 2028. Guys, we're sitting at the end of 2026. And there's no reason to believe that they can't hit that $3.5 billion. That would mean that they would slow down their trajectory as to what they've been doing over the past couple of years. So we fully believe they will hit that. They also will likely get some uplift based on all the things that Steve mentioned when additional products come to market, more awareness of treatment-resistant depression will help them. So we fully believe they're getting the $3.5 billion. In terms of what that means for us, they're only treating 2% of the available TRD patient population. They're treating 100,000 patients out of 4 million. So there is not a shortage of potential patients who deserve adequate treatments that have been studied and proven clinical efficacy in treatment-resistant depression. So we feel very good about, you know, the potential patient population. It's probably important to note that we do not anticipate switches from Spravato. Will we get them? Absolutely. As Steve mentioned, the burden to patients is quite profound for this treatment. But we're not going after Spravato patients. These are treatment-resistant depression patients. If they're stable and they're doing well on Spravato, I don't want them changing to COMP360. Again, that is something that will happen, and we know that will happen, but it's not who we're going after. We have an entire market, an untapped market of treatment-resistant depression patients that are coming in, that will come in. And we also have many who can't commit to the Spravato burden. That is 50 to 25 to 50 days off of work on an annual basis that you and your caregiver have to take off to go and get treated with Spravato versus the 2 to 4 that you may have to do for COMP360.

And just to expand on that 1 more step, the other benefit that we see with our profile and only really having the patients come in 2 to 4 times a year, means that they're likely more willing to drive longer distances to get to a site. Now with the expansion of sites, they're probably not going to have to drive that far, but if you're on Spravato and you're needing to commit 25 to 50 times a year, you want to be pretty close to that site because of how the strong profile we're seeing and how highly differentiated we are, will likely be able to expand the radius around each site in order to bring new patients in. And so that is 1 of the reasons, in addition to everything Lori had said, as to why we are so confident in the potential for this product.

And then 1 more thing on top of all that, but wait, there's more. This is specifically opportunity in TRD, but also worth mentioning that we have a late-stage program in PTSD, which is potentially even a larger opportunity. There are 13 million patients living with PTSD. There's been a lot of focus on our veterans, as there should be, but they ultimately represent a minority of people with PTSD, about 15%. The vast majority are women survivors of sexual violence. This is a terribly underserved population. There are only 2 approved products for PTSD, both of which are old generic SSRIs. Their best, and there hasn't been an approval in more than 25 years. We are in a late-stage trial now, a Phase 2B/3 that is subject to review by FDA, designed to be a single trial per registration. So we are especially based upon the data we've generated in a Phase II study we published last year, so really excited about the potential there and as I mentioned, really a very large opportunity to follow.

I appreciate the very thorough responses to my multi-part analyst. Okay. So, getting into the first year of the launch here, 2027, we know Spravato was a little bit slow out the gates, but granted the infrastructure back in 2019 had not been built. I think, you know, we've discussed that. How should we just think about the shape of the launch curve here in 2027 for COMP360 as this product makes its...

...way to the market. Yes, so we are, we will be the first classic psychedelic to market. And that, yes, the infrastructure is there, and yes, they do understand how to get billing through, they understand how to get PAs, the staff is already established. There's nothing incremental that the sites will need to do to get prepared for COMP360. But we're going to take extreme care to make sure that patients and the sites have a good experience. That includes having a field reimbursement team out in the field. Mm-hmm. We know the number 1 reason that physicians won't prescribe, and Steve alluded to it previously, if you don't get reimbursed or it's not easy to get reimbursed, they likely won't prescribe the product. The patient has a bad experience because they're not well prepared or they don't understand what is happening, or they themselves can't get the product reimbursed, then they likely the sites will likely not prescribe. So we're trying to remove all those barriers. And because of that, it will take some handholding along the way to make sure that sites are well trained, well educated, and fully prepared, and can helpfully get the reimbursement codes through easily. Due to that, we anticipate the launch to be somewhat slow coming out of the gate, just because this is a new product and sites are going to want to get a little bit of clinical experience before they start doing additional ramp. But we do expect, if we do it well, that that ramp will be quite dramatic, and most likely be...

...a pretty dramatic increase and a fast fashion. It was slow to go fast. Yes. Tremendous amount of anticipation for this product, both from providers and from patients. So we're not seeing anything on the demand side for this not to take off. It's to Lori's point, we are purposely trying to help providers go a little bit slower at the beginning just to make sure everything is ironed out so that we can get to that full access that we anticipate 1 wants this product and 2 has access to it.

So I thought maybe we could pivot a little bit now to discuss the competitive landscape and how this might play out over the next few years. So there is a competitor with an LSD-based therapy that is looking to come to market for both GAD and MDD. How do you think the profile of COMP360 and psilocybin here would stack up against an LSD-based product? And for instance, are there qualitative aspects of the overall experience with psilocybin that may appeal to patients?

Yeah, first I want to clarify that we don't view them as competitors. They're in MDD, we're in TRD, 2 different patient populations. Their study was in a completely different patient population than what we studied in. Again, they're entering into a market with many MDD products available. We are entering into a market where there's only 1 product available. However, that said, we want them to get to market. The more products that actually get to market, the better the economics are for these sites, the more awareness is around psychedelics and the potential for psychedelics for patients, the more patients that come into these clinics. I'm going to hand it over to my psychiatrist friend down here to talk about what his feelings are about the difference between the 2 molecules.

Yes, well, just, you know, first, just to pick up exactly where Lori left off. I think, and just to give a little bit more detail on the difference in the populations that we studied, in the recent, the average duration of an episode was about 9 months. Whereas in our trials in a TRD population, that average duration, the chronicity of the current episode was 3 to 4 years. And it's well established that the longer someone has gone without successful treatment, the more difficult they are to treat. To treat, and so it stands to reason that you can move upstream and if you've proved efficacy in the most difficult population then your product will work well in a less chronic population. The opposite has not been borne out over time. There are many products that are labeled and indicated for MDD that have tried to prove efficacy in TRD and not been able to do so. And so just to further drive home the point that these really are different populations, but then, to come back to some of the other points around the difference in the nature of the experience or at the patient level or what the implications might be for these sites. Number 1, you know, LSD is known to be a longer experience compound, and, you know, the challenge may be the delivery of their product within the typical operating day of a clinic. Beyond that, truly, as Lori is saying, this isn't a competitive landscape in the sense of sites will be making these trade-off decisions. First of all, at the time that we launch, the only real competitor, so to speak, will be Spravato because it will be the only approved in TRD. And as I mentioned before, these sites have capacity, so any treatments they're delivering will be incremental. They won't be making trade-off decisions here. But beyond that, not any given patient will necessarily respond to any 1 treatment, and that's why it's important that there will be multiple options at these centers. And ultimately, no matter what treatment someone receives there, they may be receiving multiple of these treatments over time. That's good for patients to have those options. It's good for the sites, for their practice economics. It's healthy for the businesses. And to the point already made, it's healthy for the sector because ultimately this is good for the field of psychedelics. It will grow the pie over time, increase awareness, and it just improves, creates a very healthy system all around.