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

Good morning, and welcome to the Mind Medicine Full Year 2023 Financial Results and Corporate Update Conference Call. [Operator Instructions] For opening remarks, I would like to introduce Rob Barrow, CEO of MindMed. Please go ahead.

Thank you, and good morning, everyone. Welcome to our full year 2023 financial results and corporate update conference call. The press release reporting our financial results is available in the Investors & Media section of our website, and our annual report on Form 10-K for the year ended December 31, 2023, is being filed today with the Securities and Exchange Commission. During today's call, we will be making certain forward-looking statements, including, without limitation, statements about the potential safety, efficacy and regulatory and clinical progress of our product candidates, our anticipated cash runway and our future expectations, plans, partnerships and prospects. These statements are subject to various risks such as changes in market conditions and difficulties associated with research and development and regulatory approval processes that are described in the filings made with the SEC, including our annual report on Form 10-K being filed today. Forward-looking statements are based on the assumptions, opinions and estimates of management at the date the statements are made, including the nonoccurrence of the risks and uncertainties that are described in the filings made with the SEC or other significant events occurring outside of MindMed's normal course of business. You are cautioned not to place undue reliance on these forward-looking statements, which remain, as of today, February 28, 2024. MindMed disclaims any obligation to update such statements even if management's views change, except as required by law. Joining me on today's call are Schond Greenway, our Chief Financial Officer; and Dr. Daniel Karlin, our Chief Medical Officer. We are excited to be providing this financial and business update during this important period for MindMed. 2023 was a highly productive year for MindMed, which included with positive Phase IIb results for MM120 in the treatment of patients with generalized anxiety disorder or GAD. We believe that the initial data we shared validates our scientific understanding of MM120's mechanism of action and shows the potential for an emerging best-in-class product profile compared to today's standard of care. On March 7, we will be hosting a virtual investor event during which we look forward to sharing top line 12-week data from our Phase IIb study of MM120 in GAD as well as KOL perspective on the generalized anxiety disorder market, the data and our initial views on the commercial opportunity. In addition, we anticipate sharing results from our Phase I pharmacokinetic's bridging trial to support the differentiated product profile of our MM120 orally dissolving tablet, or ODT formulation, and its advancement into pivotal clinical trials in GAD. We are excited about this upcoming event and hope most of you will be able to join us. Please keep an eye out for additional information. Looking further into 2024, we'll be working closely with the FDA to finalize our Phase III development program for MM120 and GAD and expect to hold our end of Phase II meeting with the FDA in the first half of the year. This is intended to enable the initiation of our Phase III clinical program in the second half of the year. In addition, this year, we anticipate sharing 1-year follow-up results from the study of lysergide in anxiety disorders, which was conducted by our collaborators at University Hospital Basel. Our progress comes at a crucial time when an urgent unmet need for better treatments to address the ongoing epidemic of brain health disorders, a situation that has grown significantly worse over the past several years. In our lead indication, GAD, for example, a recent mental health prevalence study that was prepared for the Substance Abuse and Mental Health Services Administration found that 10% of U.S. adults report having symptoms consistent with a GAD diagnosis, making it the second most common mental health disorder among adults 18- to 65-years-old. In comparison to historical studies of the prevalence of GAD, the condition appears to have tripled in the last 2 decades along. This growth and prevalence and focus of anxiety disorders has unfortunately not been matched by innovative treatments with the treatment landscape remaining dominated by SRIs(sic) [ SSRI's ], benzodiazepines and in more limited cases, antipsychotics. In fact, the last original approved marketing application that was focused on the treatment of GAD was obtained for Cymbalta in 2004. While each of these medicines have gone on to become blockbuster products driving significant value to the innovators, the efficacy of these products has been limited and in many instances, intolerable side effects such as sexual dysfunction and weight gain have led to noncompliance and discontinuation of treatment, which we believe has created a significant need in the market for novel treatment options. Seeking to address these growing issues, our R&D pipeline is focused on two lead product candidates, MM120 or lysergide D-tartrate and MM402 or R(-)-MDMA. Additionally, through a broad collaboration with researchers at University Hospital Basel in Switzerland, we are exploring the potential of several assets to potentially expand our development pipeline as our lead programs continue to progress. Across these development programs, we are utilizing two different delivery paradigms. For MM120 in GAD, we are pursuing a session-based delivery approach in which the product candidate is administered under ongoing health care supervision. Separately, for MM402 in ASD, we are pursuing a standard outpatient drug delivery approach in which we envision the product candidate being administered on a daily at-home basis. Our MM120 program in GAD has seen extraordinary progress over the past year, culminating in the 4-week data from our Phase IIb trial that we announced in December 2023. The trial met its primary endpoint with statistical and clinically meaningful reductions in HAM-A scores 4 weeks after a single administration of MM120. We observed the largest clinical activity in the 100 microgram dose group with an observed effect size of 0.88. On an absolute basis, this represents a 21.3 point improvement in HAM-A score from baseline to week 4 and with 7.6 points better than placebo with an associated p-value of 0.0004. In this group, we also observed a 78% clinical response rate and a 50% clinical remission rate at 4 weeks, meaning that 4 weeks after a single dose of MM120, half of the participants no longer showed clinically significant anxiety and 78% of participants achieved a 50% or greater reduction in HAM-A score. Additionally, we observed clinically and statistically significant improvement in all of the secondary endpoints at all time points analyzed as part of the top line analysis, which included HAM-A ,CGIS and MADRS results through week 4. MM120 was well tolerated in the trial, with mostly transient, mild to moderate adverse events that predominantly occurred on the dosing day. In the context of currently available therapies for GAD, these results represent a major step forward in the field that has suffered from practically no innovation in the last 20 years. The Cohen's D standardized effect size of 0.88 in the 100 microgram dose group is more than double the effect size of the current standard of care for GAD, which are estimated to have effect sizes below 0.4 on average. We believe this result can fully be attributed to the stand-alone effect of MM120 treatment as the study was conducted in the absence of any other therapeutic intervention. These results also go on over 20 legacy studies of lysergide, or LSD, in anxiety, depression and other neurotic disorders, including our collaborators investigator-initiated trial in anxiety that delivered statistically significant results in mid-2022. We believe that the MM120 Phase IIb data clearly supports dose selection for our subsequent research and it supports advancement in the pivotal Phase III clinical trials for GAD. With the results of this trial, we achieved all of our goals of Phase II development for MM120. In particular, we have rigorously characterized the dose-response relationship of MM120 in GAD, achieved statistically significant and clinically meaningful results supporting its clinical activity and demonstrated the stand-alone impact of MM120 to deliver rapid and durable clinical benefits on validated and regulatory accepted endpoints. With this exciting progress, we are entering a phase of many anticipated key development milestones for the quarters ahead. As I mentioned earlier, at our upcoming investor event on March 7, we will be sharing top line 12-week data from our Phase IIb study of the MM120 in GAD, along with PK bridging data for our intended go-to-market formulation, which we believe will serve to further differentiate our product candidate and demonstrate its compelling clinical potential. We anticipate having an end of Phase II meeting with FDA in the first half of 2024 to align on the scope of our Phase III development program for MM120 and GAD and to initiate our Phase III clinical program in the second half of the year. We also plan to present full data from our Phase IIb trial of MM120 GAD at a scientific meeting in 2024 and are excited to share the breadth of findings from this rich data set. Additionally, based on the promising data we have observed for MM120 in indications beyond GAD such as depression, we're actively evaluating additional clinical indications and believe the overall development program for MM120 may represent the best-in-class treatment for GAD and beyond. Our second lead program is MM402, which is the R-enantiomer of MDMA. We believe MM402 holds promise for its potential prosocial effects and favorable tolerability profile versus racemic MDMA or the S-enantiomer. The focus of our MM402 program is to develop a regularly administered product that treats the core symptoms of autism spectrum disorder, or ASD; in particular, social communication difficulties. Remarkably, despite the significant and increasing prevalence of ASD, there are currently no approved therapies specifically targeted at its core symptoms. MDMA, often referred to as an empathogen, is a synthetic molecule known to enhance feelings of connectedness and compassion. The R-enantiomer of MDMA, in particular, is believed to boost serotonin and other neurotransmitter levels in the brain leading to increased sociability in interpersonal emotional connection. Preclinical studies of R-MDMA, including those we reported earlier in 2023, has shown acute prosocial and empathogenic effects, while it's reduced dopaminergic activity suggests it might exhibit fewer stimulant, neurotoxic, hyperthermic, and abuse-related effects compared to racemic MDMA or the S-enantiomer. With robust preclinical evidence supporting our approach, we have initiated our first clinical trial of MM402, a single ascending dose trial in adult healthy volunteers in the fourth quarter of 2023. This Phase I trial is intended to characterize tolerability, pharmacokinetics and pharmacodynamics of MM402 and will enable further clinical studies to characterize the effects of repeated daily doses of MM402 and the exploration of early signs of efficacy in the ASD population. Concurrently, we have collaborated with our colleagues at University Hospital Basel to conduct a comparative Phase I pharmacokinetics and pharmacodynamic study of R, S, and racemic MDMA, which has been completed with data anticipated in the first half of this year. This study enrolled healthy volunteers and was designed to evaluate the tolerability of pharmacokinetics in acute subjective physiological and endocrine effects of the three molecules. We believe that the results from this trial will expand and expedite our understanding of MM402's pharmacological profile as we progress into later-stage clinical development. With that, I will turn the call over to Schond Greenway to go over our financial results. Schond?

Thanks, Rob, and thank you all for joining us today. We will now turn to our financial results for the year ended December 31, 2023. As of December 31, 2023, the company had cash and cash equivalents totaling $99.7 million compared to $142.1 million as of December 31, 2022. We believe that our available cash and cash equivalents as well as our committed credit facility are expected to fund operations into 2026 as certain milestones are achieved to unlock additional capital. For the year ended December 31, 2023, net cash used in operating activities was $64.4 million compared to $50.1 million for the year ended December 31, 2022. Research and development expenses were $52.1 million for the year ended December 31, 2023, compared to $36.2 million for the same period in 2022, representing an increase of $15.9 million. The increase was primarily due to increases of $16.1 million in expenses related to clinical research and product development for the MM120-GAD Phase IIb trial and $2.6 million in internal personnel costs as a result of increase in research and development capacities, which were offset by a decrease of $0.7 million in expenses related to our MM402 program, a decrease of $0.8 million in expenses related to various external research development for operations and a decrease of $1.2 million in expenses related to preclinical activities. General and administrative expenses were $41.7 million for the year ended December 31, 2023 compared to $30.2 million for the same period in 2022, representing an increase of $11.5 million. The increase was primarily attributable to professional services fees and expenses related to the proxy contest in connection with our 2023 Annual General Meeting of Shareholders and additional costs to support the growth of our business. The company's net loss for the year ended December 31, 2023, was $95.7 million compared to $56.8 million for the same period in 2022. I will now turn the call back to Rob, who will provide some closing comments.

Thank you, Schond. This is a very exciting time for us at MindMed. We believe that the initial data on MM120 and GAD that we shared in December validates our scientific understanding of MM120's mechanism of action and shows the potential for an emerging best-in-class product profile compared to today's standard of care. We look forward to sharing the 12-week data from our Phase IIb study at the MM120 and GAD at our upcoming investor event on March 7. We're excited to be on the cusp of moving forward into Phase III with this program, which we currently expect in the second half of the year following upcoming consultations with the FDA. As we come to a close, I want to extend my sincere appreciation and gratitude for the critical work and unmatched execution that has brought MindMed ever closer to realizing our mission. I would like to thank our highly talented and deeply committed team, our research collaborators and clinical investigator teams, our investors and many other individuals who have been supportive, including especially our patients and their families. We are working tirelessly to deliver on the therapeutic potential of our pipeline and to transform the treatment landscape for the many individuals living with brain health disorders. With that, I'd like to thank you all again for joining us today, and I'm happy to take any questions.

[Operator Instructions] Our first question comes from the line of Brian Abrahams with RBC Capital Markets.

Congrats on the continued progress. So, looking forward to seeing the data in just a couple of weeks, a couple of questions in that regard. I guess I'm curious, what -- is there an internal bar that you guys are aiming for with regards to the 12-week durability data or sort of a minimum appropriate durability for regulators? Or for what you're thinking would be the most viable commercial opportunity there. Are you seeing anything different with regards to dropout rates between weeks 4 and 12? And then maybe just lastly on the ODT formulation, I'm just curious what your expectations are for what the PK profile would need to show to maximize the chance of replicability in a Phase III study?

Terrific, yes. Thanks so much, Brian. So taking each of those in terms of expectations, as we were heading into the announcement of our week 4 primary data in December. We talked a lot about the backdrop of SRI(sic) [ SSRI's ] and benzodiazepines and the effect sizes we are seeing there. Each of those drugs has a different dynamic where benzodiazepines can, of course, be used acutely and have been approved on endpoints such as a 4-week endpoint, whereas SRIs(sic) [ SSRI's ] -- typically because they take longer to separate from [indiscernible], take longer to take action, have looked at longer-term endpoints. But that same sort of effect size standard, I think, is something that we would say as a general expectation. If we could exceed an effect size of 0.4, that would represent an improvement over the standard of care. And of course, if you can do that after a single dose for up to 3 months, that would be particularly exciting for us. But certainly, what we saw at week 4 was a response where we had half of the patients in remission at that point. And we saw really, on average, HAM-A scores that were relatively stable and flat. We didn't lose any activity between week 1 response to the week 4 response. And so certainly, in an optimistic scenario, we continue that kind of response out through 12 weeks. And certainly from some of the historical data we've seen from studies of LSD in anxiety and depression, we've seen in many instances 6 to 12 months, or even longer, of activity. So we certainly are excited about the durability and think it will give us a great insight in terms of how long does it affect can last to many patients. In terms of the dropout rate, we reserve any comments there until we get to a final presentation of the data next week on March 7. So we look forward to sharing that and talking through certainly the dynamics of the population of the study. And then with respect to the ODT formulation, one of the things -- as we embarked on the development of that formulation, we certainly had improved product performance from a stability standpoint. LSD's a particularly unstable molecule and one that by developing the ODT formulation, we've been able to stabilize and get self stable in a way that we think is critical for commercial viability. In terms of its PK and PD performance, again, we'll look forward to sharing all of the data. But as I said in the past, one of the things we're really hoping to see is faster absorption in that study, where we can get the drug in faster and get above therapeutic concentrations. So as we look at the general kind of concentrations that need to be achieved to induce the perceptual effects that apparently the mechanism of action and drive the sort of psychological canes that result in anxiolytic effects. If we can increase the time of the AUC above that concentration and get to that concentration faster than, of course, the time a patient that's spending in a dosing session would effectively become more efficient in our view and give us additional promise for the carry through to Phase III. We don't see any substantial risk in terms of not having a bioequivalent product to take forward, or a reasonably equivalent product that would support ODT use as we go into the Phase III program. But again, we'll be excited to share all the findings in that study at the end of next week.

Our next question comes from the line of Charles Duncan with Cantor.

Yes. Rob and team, congrats on the progress. Looking forward to March 7, I appreciate the disclosure of that. I had a couple of questions with regard to Phase III trial design. I know it's pending an update or a meeting with the agency. But when you think about the sizing of that trial and then think about the sample of your Phase IIb as enrolled, how could those things change in Phase III? And then I'll come back with another question.

Thanks so much, Charles. So in terms of Phase III trial design, and sizing. Of course, there's going to be multiple factors that play into the finalization of the study, sizing and the adult population we enrolled in that study. From a statistical standpoint, of course, if we were to replicate and use the effects we've seen now at 4 weeks to sign the study into a power analysis, it implicates or indicate a very small study of even smaller size than we conducted in Phase II. Now we want to make sure that the study we conduct is large enough to support the overall program and be generalizable and be something that we can stand behind as a pivotal clinical trial. But we certainly don't anticipate that we're talking any substantial increase if we ultimately are able to see the kind of effects we saw at 4 weeks carry through to week 12.

Okay. And then my second question is for the pivotal study. I guess I'm wondering, as you look at the Phase IIb, can you speak to the role of therapy, or lack thereof, or functional unblinding in the data that you've seen and how you'll consider that for the design of the Phase III?

Yes, it's a great question. It's certainly an important topic that there's been a lot of discussion around functional unblinding is something that has been a point of focus, but I think it's been ignored how prevalent it is in psychiatric drug development. And we have entire classes of drugs such as the psychostimulants, which, of course, have clear perceptual effects. We have SPRAVATO, where there is a clear perceptual effect associated in effect in a majority of patients in those studies. So we really don't think from a methodological standpoint that there's actually anything different that would warrant deviating from a long, well-established gold standard of the design and conduct of these clinical trials. And importantly, the lack of therapeutic intervention in addition to the drug in our Phase II study means that, in our view, it's very closely aligned with FDA's guidance from 2023. And it means that we don't have to make any changes to conform with that guidance as we go into our Phase III program. So in terms of trial delivery and functional unblinding, we anticipate we will continue to dose the drug in the absence of any sort of therapeutic intervention. Patients will continue to be under safety monitoring as we did in the Phase II. But overall, the delivery protocol will look nearly, if not entirely, identical to our Phase IIb approach. In terms of functional unblinding and selection of controls, again, what we've actually seen as we look across studies is that what appears to drive a nocebo effect is more of a therapeutic involvement in the studies. For studies where there has been a heavy adjunctive psychotherapeutic component to the conduct studies, we've seen in many instances, a reduced placebo response or even nocebo response. In our study, we saw a robust placebo response, which again, don't believe -- we believe our robust placebo response is a function of not including any sort of therapeutic intervention. And it's actually functional unblinding is just simply a sort of mechanism connecting the expectancy bias as reinforced by the therapy to potential impact on clinical outcomes.

That's helpful. Last quick question, then I'll hop back in the queue, it's related to intellectual property. I guess if we fast forward to a future world of a successful pivotal and eventual approval. I guess how are you thinking about protecting the franchise? Is it mainly based on IP? Is it driven by the ODT? Or could there be other, call it, in-market factors such as the REMS that really provide the best protection against a possible, call it, competition?

Yes. Thanks, Charles. So as we can see above and have developed our market protection strategy, intellectual property is effectively a tool in the toolbox to protect a market. And it's really important that intellectual property and the overall market protection strategy is something that is differentiated, that is protectable and that ideally have Orange Book listed patents that can utilize both regulatory and legal mechanisms to protect that market. LSD, the API that we are developing in the MM120 product is something that has never been approved before by FDA. And so in our view, at a minimum, we're looking at 5 years of marketing exclusivity as the first NCE approval. Additionally, with Orange Book patents that we believe will protect our product candidate, we think that would extend any sort of generic applicants and then protect from those for at least the 30-month stay on the back end of that. Now from an IP standpoint, again, it's been very important for us to develop our IP in the context of a broader market protection strategy whereby we have the ODT formulation that we hope to show a differentiated product profile. Again, as I mentioned before, we've already actually seen that in its physical instability performance, that puts us in a position where it will be quite difficult to replicate -- if not impossible, to replicate our product. We are using Catalent, which is the only provider of -- only manufacturer of ODTs that dissolve as rapidly as the Zydis ODT's do. And by protecting that and then -- sort of creates a very narrow path that someone would have to develop to try to replicate our product, and we have a robust IP or fortress around that pathway. So we feel very, very confident in the IP protection itself. But beyond that even, as you mentioned, of REMS, there are certainly many instances where REMS and some of the delivery dynamics are an area where we'll see enhanced market protection and differentiation of our product and company. And that's something that we're also integrating into our planning and strategy for market protection as we go forward.

Thanks, Rob, for all the color.

Our next question comes from the line of Francois Brisebois with Oppenheimer.

Just in terms of the -- I was wondering if we can touch on the commercial side. I think what's helpful is maybe if you can help remind us of what's going on with esketamine on the SPRAVATO side and just maybe the learnings from them that gives you confidence with your potential commercial opportunity.

So anyone who's been following the neuro-innovator and interventional psychiatry area has seen certainly the explosion of both clinics and now adoption and sales of SPRAVATO, which J&J is now guiding from between $1 billion and $5 billion of sales, incredibly promising and exciting that new treatments in this succession based delivery paradigm are having such a significant uptake. We look at the dynamics for delivery, for reimbursement, for provision of care and the incentive structures at each level that motivate providers to adopt and deliver SPRAVATO. And when we look at each of those levels, we believe that our product actually stacks up favorably and many of the interactions we have with payers, with sites, with providers, prescribers, we also come to the same conclusion that the dynamics of delivering a drug one time for one day over the course of several hours is favorable than having patients come back up to 56 times a year to comply with the SPRAVATO administration. And that the overall time -- if we're able to show durable clinical effects out to 3 months or beyond -- the overall time a patient would be spending in the clinic is actually significantly reduced compared to SPRAVATO. From a reimbursement standpoint, there's also some advantages here where because of that reduced time in the clinic, things that are getting reimbursed like patient monitoring for SPRAVATO, which are reimbursed and can cost in excess of $15,000 a year of medical benefits to payers, we would potentially have savings to offer to reimbursement to payers there. They're clearly defined codes and mechanisms for both prescribing of interventional psychiatry drugs like SPRAVATO that would be applicable to our product for monitoring, as I mentioned before, and of course, for reimbursement of the drug. So really, I think that while there certainly is work to be done, it's important for us to -- as we have talked about in R&D, to really continue to emphasize that there is an already existing infrastructure and delivery paradigm that is seeing an overwhelming success and uptake now and that really launching into a market where we can outcompete at those locations and on those dynamics, it's just the base case. Based on the profile of our drug so far in development, we certainly believe that there's even more expansive opportunity for additional locations where the drug can be administered because we don't have -- ultimately proven out in Phase III studies, we don't see a physiological risk that would require any sort of physiological monitoring to date. So that gives us, again, an extraordinary opportunity and excitement around the potential to both outcompete in the locations and pathways and channels that SPRAVATO is being delivered today. But even beyond that to expand into other delivery locations into an easier adoption in a broader sort of location.

That's super helpful, Rob. And then so is it fair to assume that from discussions that from the payer perspective, it seems like what they might care about is maybe remission, rapid onset durability. And if that's correct, if those are kind of the big three -- if there's anything I'm missing, please let me know. But on that case of durability, 4 weeks is great. Is -- from the company's perspective, a little follow-up on the previous question, is the 12 weeks kind of gravy here? Or is this extremely important when your -- you have discussions with payers?

Certainly, the durability -- each of the components you mentioned are really the key. Remission, we haven't had many drugs in psychiatry, where a significant portion of patients really enter remission, and enter it quickly and stay there. If we're ultimately able to show that at 4 weeks, we had 50%, 1 in 2 patients were in clinical remission. They didn't have an anxiety symptoms any longer. If we're able to show that out to 12 weeks, of course, it means that for 3 months after a single dose, patients who came in with severe anxiety would not have anxiety. That's a game changer in terms of patient care. In terms of onset, there's another one that is particularly important as we talk to KOLs and our SAB, for instance, to have patients come in the door and reliably know within -- as we saw in the Phase II study, 24 hours, there was a clinical response on the CGIS, which is the only metric we have in the study to measure that rapid of a change. But to have rapid onset also gives providers the ability to know very quickly whether a patient is having a benefit or not. It's important from a payer standpoint. But I think critically important is also to understand, because of that onset, payers want to, of course, capture value. They want to -- they were happy to pay for and prior discussion with the payers, they have said, we will pay for these kinds of drugs if we can capture value. And capturing value is a function of how clearly and how robustly patients respond to the drug and how durably. So all of that sort of converges around if we see rapid onset with durable clinical benefit and a significant portion of our patients remaining in remission, we think both the provision of care and at payer level, there's a clear path to success there. You mentioned expectations out to 12 weeks. And certainly, what the data we have seen so far just through 4 weeks, puts us in a position where we are absolutely moving forward into a pivotal program. If we were to see continued response and durability out to 12 weeks, that would just then continue to build on the case and the prospects for the program. But certainly, what we've seen so far is enough to move forward, and we're making plans accordingly.

All right. Thank you very much. Congrats on the progress.

Our next question comes from the line of Sumant Kulkarni with Canaccord Genuity.

I have a two-parter on MM120 development and a financial one for Schond after that. So the two part is, could we expect to also see 12-week data on the change in the MADRS score when you present your durability data on March 7? And if you were to ultimately pursue an indication for depression with MM120, is there a preference on whether you would like to target major depressive disorder or treatment-resistant depression?

Yes. Thanks so much, Sumant. So in terms of data we'll be presenting next week, we would expect in terms of outcome measures to present a similar set of outcome measures we presented for week 4. So that would include HAM-A, CGIS and MADRS, so I was excited to share data both in response with anxiety symptoms and also with comorbid depression symptoms. In terms of development and the ultimate indication, reserve that as we advance in planning and scoping a potential additional indication in psychiatry and certainly at the appropriate time, we will give further clarity there. I think it's important as we talked about reimbursement, there are multiple dynamics here just because the drug is approved for major depressive disorder as we've seen some of the more recent entrants, the more recent SRIs(sic) [ SSRI's ] that have come to market that are labeled for major depressive disorder, of course, programs like Sage and Biogen's zuranolone program, which is ultimately being developed in MDD. The regulatory label certainly provides a broader set of patients that could be eligible on label for administration of the drug. But certainly what we would anticipate is that payers are likely to expect to be treating patients where there is value and that is both a function of severity and nonresponse to prior treatment. So again, reserve as a final determination or guidance on what that indication would be. But I'm certainly considering a broad scope and depression-related indications.

Got it. And then the financial question. Could you comment on what your cash run rate would be without the additional unlocking from milestones?

Good question, Sumant. I think that, at least from our standpoint, our historical burn has typically been somewhere between $15 million, plus or minus 20%. And so, in addition to that, as it relates to the K2 facility. Again, those are milestones that are performance-based milestones, such that we have the option as we continue to execute on the plan to be able to draw those items down. So they are in part, part of the overall funding strategy.

Our next question comes from the line of Elemer Piros with Rodman & Renshaw.

Good morning, gentlemen. Can you hear me?

We can. Hi, Elemer.

So I'd just like to recircle back to -- and I think the question was asked by Charles -- on the size of the Phase III trial. We clearly saw a massive signal to noise ratio in the Phase II trial, at least up to week 4. But how do you balance, Rob, the fact that there are ICH guidelines out there and this drug could be potentially approved for millions of patients in terms of when you design the Phase III -- set of Phase III trials?

Yes. Thanks so much, Elemer. It's a great point and question that's why to -- when we talk about the finalization of Phase III program and protocol, it is -- there are many factors that come into play. Of course, overall patient exposures. I want to make sure that the results are externally valid and generalizable to that magnitude of a population. I think what we're really particularly encouraged by seeing recently Lykos therapeutics MDMA for post-traumatic stress disorder NDA be accepted by FDA. And that development program was in the mid-hundreds of overall exposures. Granted there's a lot of historical exposure data there, like with LSD, right? There is certainly a long understanding of these molecules and a long history of research for these molecules in this drug class. But as we conceive of the Phase III program, again, we want to make sure that it is something that is generalizable that supports an overall development strategy that leads us to a marketing application. But again, we're going to reserve the right -- reserve the final commentary on exactly what the size that will be as we enter in the Phase II discussions with FDA and multiply arrive at a final study.

Yes. And Rob, you alluded to this earlier that you placed less -- much less emphasis on the therapy component. You're going to be talking to the FDA within several months while they are evaluating the Lykos application, which is heavily dependent on therapy, how do you distinguish to the FDA between the two paradigms of the necessity of adjacent therapy versus focusing on the drug effect in your case?

Yes. It's a really important topic. In terms of differentiating, there's a lot of discussion and Reagan-Udall Foundation recently put on a panel, which many may have attended where there -- we had some discussions and dialogue on the panel with us, with compass, and with maps, about these sorts of batters. But from a development standpoint and approaching FDA really we limit any sort of engagement with formal meetings with FDA to the scope of our development program. We've -- since day 1, charted a very clear course that is to demonstrate the stand-alone drug effect of our product candidates. And that -- there's certainly a discrete -- while there's a loose definition of -- that includes things like all mind-altering substances such as SPRAVATO and ketamine and MDMA. We're talking about really a distinct drug class with the serotonergic psychedelics and within MM120 in particular. And so our approach will be informed by our data and by our strategy and by our understanding and engagement previously with FDA about what the expectations are. There's been a clear -- the guidance from 2023 made quite clear the need to characterize the stand-alone effects of a drug. And that's exactly what we've done, really uniquely for the first time in the field has done. So we feel really confident in our approach and the ability to support that as we enter pivotal study.

Our next question comes from the line of Patrick Trucchio with H.C. Wainwright.

This is Louis [indiscernible] for Patrick. Understanding that depression is different from anxiety. Should we anticipate a Phase III program design similar to COMP360 design in depression? And should we anticipate a true placebo being part of the program? And then I have a follow-up question.

Yes. In terms of control conditions, and of course, it's likely a topic we want to line around with FDA in the Phase II meeting, we fundamentally believe that regardless of mechanism of action of drugs and regardless of the qualitative differences and the perceptual effects of this drug class versus, say, psychostimulants or dissociative anesthetics like ketamine or SPRAVATO, the gold standard in research is to conduct placebo-controlled studies. Using a nonplacebo control as a comparator in studies is something that calls into question the interpretability of the study results and really, I think, the validity of studies of that nature in general. So our -- certainly our preference and our strong belief is that placebo-controlled research is the right way to conduct research. It's why it's a gold standard and it's why it's indicated by ICH and effectively every international body that regulates and conducts research and medicine. In terms of the scope of the Phase III development program, we've said previously, I think we anticipate doing two 12-week placebo-controlled studies as a target, but we're going to reserve final commentary around the study design and the dynamics there when we have in the Phase II meeting with FDA. We do anticipate continuing patients on the open-label extension study. to characterize what happens upon retreatment and just demonstrate even further durability out to perhaps a year longer.

And does the Phase II program start depend on the outcome from the bridging study? And if so, when do you expect that data to be reported?

Yes. Phase III program is -- planning is underway. We anticipate starting that in the second half of this year. Our bridging -- PK bridging data for our ODT product, we'll be sharing next week at our March 7 Investor event as well. So look forward to sharing that. But right now, we're continuing to focus and we plan to implement and use that product as we enter Phase III program.

I would now like to turn the call back over to Rob Barrow for closing remarks.

Yes. Thank you, operator, and thanks, everyone, again for joining us here today. We hope you all join us next week on March 7 for an investor event and look forward to sharing the results of that call. Thank you so much.

This concludes today's conference call. Thank you for your participation. You may now disconnect.