Definium Therapeutics, Inc. (DFTX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Mind Medicine Second Quarter 2020 Financial Results and Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Robert Barrow, Chief Executive Officer and Director at Mind Medicine. Mr. Barrow, you may begin your conference.

Thank you, operator, and good afternoon, everyone. Welcome to MindMed's Second Quarter 2022 Financial Results and Corporate Update Conference Call. Following market close today, we issued a press release with a summary of our results. The press release reporting our financial results is available in the Investors and Media section of MindMed's website and our quarterly report on Form 10-Q for the quarter ended June 30, 2022, will be filed today with the Securities and Exchange Commission. Joining me on today's call is Schond Greenway, our Chief Financial Officer; Dr. Miriam Halperin Wernli, our Executive President; and Dr. Daniel Karlin, our Chief Medical Officer. During the course of today's call, I will provide an overview and update on our business. Then Schond will review financial results for the quarter ended June 30, 2022, followed by a Q&A. Before we begin, let me remind you that during this conference call, we will be making forward-looking statements. The company's actual results may differ materially from those expressed in or indicated by such forward-looking statements. For a description of risks, please refer to our quarterly and annual filings with the Securities and Exchange Commission. Today, I will begin with an update on our corporate strategy. During the course of the quarter, we undertook a review of all of our assets, R&D programs and our overall business strategy. Based on this assessment, we're reaffirming our key near-term strategic priorities and are focusing our resources on advancing our MM-120 program in psychiatric indications, specifically generalized anxiety disorder and attention deficit hyperactivity disorder and our MM-402 program in autism spectrum disorder. We believe the enhanced focus of resources on these programs represents a cost-effective approach to advancing the programs in our pipeline and have the highest probability to generate near-term value for our shareholders. With respect to our MM-110 development program, which is a non-hallucinogenic congener of ibogaine. In the second quarter, we announced positive top line data from a Phase I placebo-controlled study of MM-110 in 108 healthy volunteers. We previously stated that our goal for this program was to initiate a Phase II trial in opioid withdrawal subject to our ongoing dialogue with and feedback from FDA. Following a productive Type C meeting, we received feedback from the agency, in which they requested additional preclinical characterization of MM-110 that will now be required prior to initiating the proposed Phase IIa trial in the U.S. We agree with the agency as this information would be necessary to treat participants in our planned Phase IIa clinical trial with what we believe to be an adequate dose and duration. Given the time and cost that would be required based on these recent developments, we're reallocating our internal resources from this program to our other product candidates that we believe have a higher probability to generate near-term value for our shareholders. In parallel, we're undertaking efforts to seek nondilutive sources of capital and/or collaborations with third parties to address these nonclinical hurdles and depending on interest, would revisit a Phase II clinical development program for MM-110. We are also reducing the allocation of resources to other early-stage research and development programs. Again, we believe these decisions free up meaningful resources that will be reallocated to our highest priority programs and extend our cash runway further into 2024. We continue to progress these highest priority programs as expeditiously as possible and believe our team has the capabilities and resources to execute a fastest-to-market strategy for MM-120 and MM-402. Let me now provide some context and background for these decisions beginning with MM-120. MM-120 is our proprietary pharmaceutically optimized form of lysergic acid diethylamide or LSD, is being developed for the treatment of psychiatric disorders, including generalized anxiety disorder, or GAD, and attention deficit hyperactivity disorder or ADHD. In May, our collaborators at University Hospital Basel presented top line results from a Phase II placebo-controlled investigator-initiated clinical trial of LSD in the treatment of anxiety disorders at London Psych Symposium. The results in 46 patients with clinically significant anxiety demonstrated the significant rapid, durable, and beneficial effects of LSD and its potential to safely mitigate symptoms of anxiety and depression. The study drug was well tolerated and at a dose of 200 micrograms, resulted in significant and strong reductions of global state trait anxiety inventory or STAI-G scores 16 weeks after treatment in the between-subjects analysis with a statistically significant improvement from baseline compared to placebo. We're encouraged by these positive data, which reinforced decades of clinical evidence for the potential therapeutic effects of LSD in anxiety and depression and further support our clinical development strategy and our enthusiasm for our MM-120 program, NGAD. Investigator enthusiasm for the science and for participation in our clinical program is strong, and we remain on track to dose our first patient in the Phase IIb dose optimization trial of MM-120 and GAD during the third quarter with top line results from the study expected in late 2023. Based on our team's extensive expertise in the development of CNS drugs and specifically psychedelic, we are confident that our clinical development plan represents the fastest path to market. Our team remains highly motivated to execute this development program in the most efficient and are possible to minimize the lag time between stages of development and to demonstrate best-in-class execution of our development program. As a reminder, our Phase IIb clinical trial is designed to enroll up to 200 participants who received a single administration of up to 200 micrograms of MM-120 or a placebo. The primary objective of the study is to demonstrate reduction in anxiety symptoms for up to 12 weeks after a single administration of MM-120 across 5 treatment arms. The initiation of this trial represents a major milestone and builds on growing body of evidence that further underscores the therapeutic potential of MM-120. I believe this is just the beginning for MM-120 as we continue to advance our clinical development program and deliver on our goal of generating the required clinical data to support the regulatory approval of MM-120 in GAD as efficiently and cost effectively as possible. Our Phase IIa study of MM-120 and ADHD continues to progress with enrollment, and we remain on track to deliver top line results in late 2023. We continue to believe in the broad therapeutic potential of MM-120. Although over the near term, we are prioritizing the clinical research of MM-120 and psychiatric disorders, at the appropriate time in the future, we intend to continue to explore indications in other disease areas, such as chronic pain, among others, as we seek to advance novel therapeutic approaches for patients with a wide range of brain health disorders. I'd now like to turn to our MM-402, or R(-)-MDMA program, which is a synthetic R-enantiomer of MDMA that exhibits prosocial activity in preclinical models. MM-402 is being developed for the treatment of core symptoms of autism spectrum disorder or ASD, which is a developmental disorder characterized by atypical social communication and interaction, repetitive patterns of behavior and restricted interest. Preclinical studies and scientific literature to date have continued to reinforce compelling data, providing strengthening evidence of the potential of RM R(-)-MDMA and its acute prosocial effects. While it's reduced dopaminergic activity suggested it will exhibit a favorable safety and tolerability profile compared to racemic MDMA or the S-enantiomer. Additionally, R(-)-MDMA has been shown to maintain prosocial effects with reduced stimulant activity compared to MDMA in preclinical studies, and we believe may have the potential to be administered in a standard dosing regimen. We expect to commence a sponsored Phase I clinical trial of R(-)-MDMA in 2023. In addition to our collaboration with University Hospital Basel, we expect to initiate a comparative Phase I pharmacokinetics and pharmacodynamics trial of RS and racemic MDMA in healthy volunteers in the third quarter of 2022. Additionally, our external collaborations and early research and development activities have continued to progress, including the conclusion of the initial collaboration between MindMed and NexStage Therapeutics. While we are reducing the allocation of resources to these early-stage programs, we will continue to explore nondilutive and self-funding collaboration that will drive meaningful advancement of our early R&D pipeline. I'll now turn to our platform of digital medicine products, which is strategically aligned with our drug development program and has the potential to facilitate broad and diverse access to our product candidates. Under our MindMed Session Monitoring System or MSMS platform, we have continued to advance our clinical studies with the completion of data collection to evaluate sensory data during a consciousness altering therapeutic session. As a reminder, the MSMS platform is a technological product platform that provides the foundation for the development and implementation of a suite of regulated and unregulated products for use by clinicians and patients during treatment sessions that may also include the use of consciousness altering medications. Under our anxiety digital diagnosis for precision psychiatry or ADDAPT program, we've continued to advance our clinical research with a study that is currently in private beta enrolling by invitation using a newly developed mobile application. Finally, under our Quantifying the Processes and Events of Psychotherapy at Scale or QPEPS program, we have completed the data collection period of our clinical research study, and the study is entering an interim analysis space. Overall, we are extremely excited about these advancements and the value-driving milestones ahead. With our enhanced focus on the MM-120 program in psychiatric disorders and MM-402 in ASD, we believe we will gain operational and capital efficiencies that represent a cost-effective approach to bringing these products into late-stage development with significant data readouts anticipated in the next 12 to 18 months. We believe our clinical development plans represent the fastest and most efficient path to bring our product candidates to market, and our lean and efficient team is poised to demonstrate our best-in-class execution of our core R&D programs. On the leadership front, today, we announced and are pleased to welcome Dr. Suzanne Bruhn and Dr. Roger Crystal as new independent members of our Board of Directors. Sue and Roger both bring valuable mix of public company life sciences experience in driving major fundraising efforts and developing and bringing innovative new products to market. Their integrity, independence and experience will be invaluable as we advance through several key product development inflection points in the coming year, and we look forward to their immediate contribution to our company's success. In connection with the addition of these 2 independent directors, Dr. Miriam Halperin Wernli retired from a position as a Board member. Miriam has played an essential role in the strategic direction, execution and advancement of MindMed as both a valuable member of the Board of Directors and management team. On behalf of the Board, we thank Mary for her service on the Board as she continues in her role as Executive President, and which she serves a key leadership role across all of the company's organizational and R&D initiatives. I will now turn the call over to Schond Greenway, our CFO, who will discuss our financial results.

Thanks, Rob, and thank you all for joining us today. We will now turn to our financial results for the second quarter ended June 30, 2022. The research and development expenses for the second quarter of 2022 were $9.3 million compared to $8.1 million for the same period in 2021. The increase was primarily due to $2.8 million of external costs related to the MM-120 program and the commencement of the R(-)-MDMA study and was offset by a decrease in external costs related to the completion of our 18-MC study in 2021. General and administrative expenses were $7.6 million for the second quarter of 2022 compared to $37.1 million for the same period in 2021. The decrease was primarily due to $24.4 million in addition to noncash stock-based compensation expenses related to the modification of stock option awards and restricted stock units. Net and comprehensive loss for the second quarter of 2022 was $17.1 million compared to $44.5 million for the second quarter of 2021. Our net cash used in operating activities was $28 million for the 6 months ended June 30, 2022, compared to $21.2 million for the same period in 2021. As of June 30, 2022, our cash and cash equivalents were $105.7 million compared to $133.5 million at December 31, 2021. Our goal is to continue to be prudent with how we manage our cash and our expenses. And we believe that our cash and cash equivalents will be sufficient to meet our operating requirements beyond our key development milestones in 2023 and into 2024, which is well over 18 months of cash runway based on our current budget. Finally, I want to mention that earlier in the month, the Board of Directors approved a ratio of [ 1 for 50 ] reverse share split of the company's common shares. The reverse share split is intended to enable us to achieve several important corporate objectives by providing greater flexibility in considering and planning for future potential business needs and to address the NASDAQ minimum price bid requirement. The reverse share split is expected to take effect after the close of business on August 26, 2022, with the trading expected to begin on a split-adjusted basis on the NASDAQ and the NEO exchanges at market open on August 29, 2022. I'll now turn the call back over to Rob, who will provide some closing comments. Rob?

Thank you, Schond. As we've demonstrated, the second quarter was marked by steady progress across our development pipeline. But equally as important, we made some key decisions on our corporate strategy and focus that I believe will drive increased success and efficiencies. We have a highly talented and committed team here at MindMed who have continued to execute this plan. Our near-term priorities are clear, advancing the ongoing clinical trials of MM-120 in GAD and ADHD, commencing our Phase I clinical trial for MN-402 in healthy volunteers in 2023. And through our collaboration with UHB initiating a Phase I comparative pharmacokinetics and pharmacodynamic trial of RS and racemic MDMA in healthy volunteers in the third quarter of 2022. Finally, I want to note that we are aware of the letter issued earlier today by FCM MM Holdings. Unfortunately, FCM chose not to directly contact us about their views before issuing the letter. That was disappointing because we are always open to feedback from our shareholders. Nevertheless, we will be receptive to engaging in a constructive dialogue with FCM if they're interested. We're still reviewing their letter and do not plan to address it on this call. Therefore, we ask that your questions be limited to our second quarter update and the progress of the business that we've discussed today. With that, I'd like to thank you all again for being here today and happy to take any questions.

[Operator Instructions] We have a question from Charles Duncan with Cantor Fitzgerald.

Okay. Rob and team, congratulations on the progress and completion of that strategic review. And to Schond, congrats on joining the MindMed group. Had a couple of questions, primarily on 120. I guess I'm wondering if you could provide a little bit more color, Rob, on the GAD study. Nice to see that you plan to dose the first patient. But can you give us a little bit of sense of the number of clinical sites that you plan to initiate over the course of the near term? And then whether or not those patients that you'll be enrolling in the GAD study are experienced with LSD or not?

Yes. Thanks so much for the question, Charles. In terms of the clinical design for MM-120 and GAD, we -- as you know, we are conducting a 5-arm parallel clinical trial in the syndication. And we have 200 patients across the entire study. We're enrolling at 20 sites here in the U.S. as our target number of sites, and we anticipate to get many of the sites online in the very near term. Given some of the controlled substances requirements to activate clinical sites using a Schedule 1 controlled in clinical research studies that can vary by jurisdiction, by state, and by the local DEA office. But we've been working feverishly in the background with each of the sites to get their applications together and anticipate getting many of the sites to online in the very near term.

Okay. And then I think you used the words up to 200 patients to be enrolled in that study. I may have misheard that. But if I did hear it correctly, could you let us know what would determine the total sample size, the final sample size?

Yes. The target sample size is 200 patients. Obviously, there's some final variance that's possible in those numbers, plus or minus a few patients simply met -- based on the end of the study enrollment. But we are targeting and anticipate enrolling the full 200 patients in that study.

Our next question is from the line of Elemer Piros with ROTH Capital Partners.

Yes. Rob, just one question on the anticipated 20 sites. I saw one of them is listed on clinicaltrials.gov. Is there any more? Is there maybe a delay with the listing on that website or they are coming on as we speak. So they're just not in the system yet.

Absolutely. There's no delay. All the sites are coming online, and it's just a matter of when those sites are posted on clinicaltrials.gov.

Okay. And could you please also just a little bit elaborate on your decision not to directly invest in MM-110 at this stage? What brought that decision or what precipitated that decision, if you wouldn't mind?

Absolutely. As I mentioned, we had a productive engagement with FDA. We were exploring opportunities to pursue that program in a number of jurisdictions. But as we previously announced, we were intent on advancing that program into Phase II subject to those discussions with FDA. Based on those discussions, it was clear that we needed to do additional nonclinical research in order to support an adequate dose and duration in the trigger of opioid withdrawal and therefore, decided that the time and cost requirements to bring that product forward at this time needed to be allocated to our other programs. We, of course, see value and potential in this program. And at the appropriate time in the future, we'll reevaluate moving forward into a Phase 2 program.

Our next question is from Patrick Trucchio with H.C. Wainwright.

Just a couple of follow-up questions for me. I guess just the first one, if you could remind us in the LSD Phase IIb trial, what are the doses that are going to be evaluated of LSD? And would the low dose or would a subperceptual dose be expected to act as the control in this trial?

Yes. Thanks so much, Patrick. So the doses we're testing in addition to a placebo are 25 micrograms, 50 micrograms, 100 micrograms and 200 micrograms of LSD. Those correspond to different levels of perceptual activity after acute administration of LSD. One of the great things about the studies that will enable us to do post hoc pair-wise comparisons between each of those dose levels. One of the things we feel has been inadequately explored with the psychedelics is the dose responsiveness, both acutely and in terms of durability of effects across this dose range. So we will certainly be looking at the potential of all of these doses to impart either rapid or prolonged clinical benefit, but we'll also be looking at the comparisons between the dose such as 25 million -- or excuse me, 25 micrograms compared to the 200 microgram or 100 microgram dose to determine if there are differences in terms of placebo response or functional unblinding between those doses.

Yes, that's helpful. And then as well in the Phase IIb trial, can you talk about are there any requests or is there anything from the regulators on the safety and tolerability side that would need to be generated that you would be looking for beyond kind of what we would normally look to see in a Phase IIb trial? And what would you need to see from kind of an efficacy and safety perspective to give confidence to move this program forward to Phase III?