Earnings Call Transcript - CMPS Q2 2021

Operator, Operator

Good day, ladies and gentlemen. Welcome to the COMPASS Pathways Second Quarter 2021 Conference Call. As a reminder, this call is being recorded.

Stephen Schultz, Senior Vice President of Investor Relations

Thank you, operator. Welcome all of you, and thank you for joining us today for our second quarter 2021 results call. My name is Steve Schultz, Senior Vice President of Investor Relations at COMPASS Pathways. And today, I'm joined by George Goldsmith, Chairman and Chief Executive Officer; and Piers Morgan, our Chief Financial Officer. George will begin today's call with a business update on our recent progress, and Piers will follow with a review of our financial results. We will then open the line for questions. The call is being recorded and will be available on the COMPASS Pathways' Investor Relations website shortly after the conclusion of the call. We hope you've had a chance to review our results press release issued earlier today. Before we begin, let me remind everyone that during the call today, the team will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. You should not place undue reliance on these forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those risks and uncertainties described under the heading Risk Factors in our annual report on Form 20-F, filed with the U.S. Securities and Exchange Commission earlier today and in subsequent filings made by COMPASS with the SEC. Additionally, these forward-looking statements represent our views only as of today and should not be relied on as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. And with that, I now hand the call over to our Chairman and CEO, George Goldsmith.

George Goldsmith, Chairman and Chief Executive Officer

Thank you, Steve, and welcome, everyone. This quarter, I am pleased to report that we continue to make great progress in all aspects of our business. On July 8, we announced that our lead development program of our COMP360 psilocybin therapy in treatment-resistant depression, or TRD, reached a significant milestone as the last participant completed their psilocybin session. With this milestone, the trial is now fully recruited at 233 individuals, exceeding our original goal of 216. This Phase IIb trial is the largest clinical trial of psilocybin in history, and we expect data from this trial by the end of the year. I want to remind you that the primary objective of this trial is to identify the target dose of our planned Phase III clinical trials and inform other aspects of the design. This important step in the development process is one that was a requirement prior to progressing to Phase III based on our interactions with regulators. In this study, we are comparing a 25-milligram dose and a 10-milligram dose of COMP360 psilocybin with a 1-milligram dose, given to the patient in conjunction with psychological support from specially trained therapists. The primary endpoint of the trial is a reduction in depression symptoms as measured on the MADRS scale at 3 weeks. We will also be looking at the durability of response at numerous points up to 12 weeks as well as safety and tolerability. We believe that our COMP360 psilocybin therapy has the potential to provide a rapid and sustained treatment effect with a well-tolerated safety profile. Once we have the data, in addition to those arising from our extensive preclinical studies, we plan to meet regulators in an end-of-Phase II meeting. The information we obtained from this trial will inform the design of our Phase III pivotal program, which we expect to begin as quickly as possible. In addition to our TRD study, we continue to invest in the expansion of our portfolio through new indications and new compounds. We supply COMP360 free of charge to investigator-initiated studies exploring a range of indications in areas of unmet mental health need, including anorexia nervosa, bipolar disorder II and severe TRD. Any positive signals from these small studies would offer COMPASS the option to elevate the research into large late-stage clinical programs. A number of these studies are currently underway. One, in particular, is being performed by the Aquilino Cancer Center in Maryland, United States, where they are finishing a small open-label study of COMP360 psilocybin therapy in cancer patients. We expect data from this study later this year. We also plan to begin a number of new studies and new indications over the next few months. We continue to be active in preclinical research, exploring new psychedelic compounds. These studies are being done through the COMPASS Discovery Center, a network of leading scientists from the University of Sciences, Philadelphia; UC San Diego School of Medicine; and the Medical College of Wisconsin. This early-stage work should enable us to broaden our portfolio beyond COMP360 psilocybin therapy. In the U.K., we are developing a research partnership with leading institutions, South London and Maudsley NHS Foundation Trust and the Institute of Psychiatry, Psychology and Neuroscience at King's College London. We have signed a memorandum of understanding, setting out our joint intent to work together to accelerate psychedelic research and develop new models of mental health care in the U.K., particularly in areas of unmet needs such as depression, PTSD and anorexia nervosa. We are facing an urgent global crisis in mental health care, made worse by the COVID pandemic, and need to work collaboratively to address this. COMPASS was honored to be part of a working group that helped to establish mental health as one of the seven critical missions in the U.K. government's life science strategy announced last month. Also, in the U.K., we are proud to be a founding supporter of the British Neuroscience Association's inaugural scholars program, which launched earlier this year and aims to support students from underrepresented ethnic groups to thrive in neuroscience. This fits well with our ongoing commitment to fostering and maintaining a bold culture of equity, diversity and inclusion within our company and in the wider neuroscience and health care communities. Our COMPASS team continues to grow in all areas in support of our goal to transform the patient experience in mental health care. We have made important leadership hires in clinical science, regulatory affairs, clinical safety, quality and CMC as we develop new compounds, additional indications, and prepare for our Phase III program. Notably, we announced two senior team members: Guy Goodwin, our new Chief Medical Officer; and Danielle Schlosser, our Senior Vice President of Clinical Innovation. Professor Guy Goodwin is a Maritas Professor of Psychiatry at the University of Oxford. He is a deeply experienced psychiatrist and an outstanding leader in the field who is wholly committed to patient care. He's been working with us in an advisory capacity since the beginning of the Phase IIb trial, and we're delighted to welcome him in a more active and full-time role. Dr. Danielle Schlosser joined us from Verily Life Sciences, a sister company to Google, where she was behavioral health lead, overseeing the launch of several products, including digital measurement capabilities and clinical care initiatives. Danielle is now leading our therapy research and training team. Her clinical and digital innovation experience will accelerate our work as we move towards Phase III and adds to the tremendous strength we are building in our digital team. Our work is in developing new models of care with psychedelic therapies, but our focus is firmly on mental health and transforming mental health care for patients. As we lead in the science, so much we lead in trying to eliminate the stigma associated with mental health illness. With this in mind, we recently launched a podcast called Everyone Has A Story: Talking About Mental Health. The podcast features guests who talk about their mental health journeys and discuss critical issues in mental health care, to open up a dialogue about mental health challenges and inspire others to do the same. The first two episodes are available through the COMPASS website or any podcast app. Do listen and tell us what you think. Finally, a word on patents. We continue to build a strong IP portfolio with eight granted patents now in the U.S., the U.K., Germany and Hong Kong. We recently received a nonbinding opinion from the U.K. IP office, questioning aspects of some of the claims in one of our granted U.K. patents. The opinion came in response to a request for opinion from a third party, and it's just that, a nonbinding opinion. The opinion does not invalidate our patent or any of its claims, and we remain confident in the strength and defensibility of our patents. With that, I will now hand over to Piers, who will give you an update of our financial results for the quarter.

Piers Morgan, Chief Financial Officer

Thank you, George. The company continues to maintain a strong financial position with cash and cash equivalents of $316.3 million at June 30, 2021, compared with $190.3 million at December 31, 2020. This includes the proceeds from our recent additional raise of $165.6 million before underwriter fees and expenses, which included the full exercise of the underwriting option to purchase additional ADSs or green shoe. This is expected to fund operations into 2024. I will now recap our financial results for the three and six months ended June 30, 2021. The loss from operations for the three months ended June 30, 2021, amounted to $19.5 million compared with $17.7 million for the prior year period. The loss from operations includes noncash share-based compensation expense of $1.9 million for the three months ended June 30, 2021, compared with $9.7 million noncash share-based compensation in the prior period. Research and development expenses for the second quarter of 2021 amounted to $11.4 million, an increase of $4.6 million compared with the second quarter of 2020. This increase in research and development expenses compared with the prior year period was primarily attributable to: first, an increase of $4.7 million in development expenses, which is principally related to an increase of $3.8 million in clinical trial expenses and an increase of $0.6 million in preclinical studies supporting our investigational COMP360 psilocybin therapy development. Secondly, an increase of $1.4 million in personnel expenses, mainly in digital and clinical activities. Thirdly, a decrease of $1.7 million in noncash share-based compensation. And fourthly, an increase of $0.2 million in other expenses, which was primarily related to increases in consulting and regulatory compliance expenses. General and administrative expenses were $8.2 million in the second quarter of 2021 compared with $11 million for the same period in 2020. The decrease of $2.8 million in general and administrative expenses compared to the prior year period is primarily attributable to: firstly, an increase of $1.9 million in personnel costs, primarily additional personnel in general administrative and commercial functions to support our growth initiatives, including our transition to a public company. Secondly, a decrease of $6.1 million in noncash share-based compensation. Thirdly, a decrease of $0.5 million in legal and professional fees, primarily related to expenses associated with operating as a public company. And fourthly, an increase of $2 million in facilities and other expenses, including rent, depreciation and insurance. Other income for the second quarter of 2021 amounted to $2 million compared with other income of $1.5 million for the corresponding period in 2020. The increase in other income amounting to $0.5 million compared with the prior year was primarily attributable to: firstly, a net movement of minus $1.6 million in foreign exchange arising from a loss on foreign exchange of $0.6 million in the second quarter of 2021 compared with a gain on foreign exchange of $1 million in the second quarter of 2020. Secondly, a net movement of plus $0.7 million on the fair value of convertible notes, reflecting an amount of $0 in the second quarter of 2021 compared with a loss of $0.7 million in the corresponding period of 2020. And thirdly, an increase of $1.4 million in other income and expenses, which was primarily related to an increase in the income from R&D tax credits, which rose to $2.6 million in the second quarter of 2021 compared with $1 million in the second quarter of 2020. The net loss was $17.5 million or $0.44 loss per share for the three months ended June 30, 2021, compared with a net loss of $16.2 million or $1.65 loss per share during the same period in 2020. The loss from operations for the six months ended June 30, 2021, amounted to $33.1 million compared with $26.4 million for the prior year period. The loss from operations included noncash share-based compensation expense of $3.6 million for the six months ended June 30, 2021, compared with $11.4 million of noncash share-based compensation in the prior period. The net loss was $30.2 million or $0.79 loss per share for the six months ended June 30, 2021, compared with a net loss of $24.8 million or $2.61 loss per share during the corresponding period in 2020. And with that, I hand you back to George. Thank you.

George Goldsmith, Chairman and Chief Executive Officer

Thank you, Piers. We continue to make steady progress toward our goal of accelerating patient access to evidence-based innovation in mental health care to enable people to live happier and healthier lives. To achieve this bold mission takes leadership, and to us, this means building the best team and partnering with the best people, advancing the pipeline, executing on clinical trials, developing digital capabilities, ensuring a favorable commercial landscape, and above all, improving the patient experience and delivering better patient outcomes. Thank you for your time today and your interest in COMPASS. We will now open the line for questions. Operator?

Operator, Operator

Our first question comes from Charles Duncan from Cantor Fitzgerald.

Charles Duncan, Analyst

George and team, congratulations on a great quarter of progress in the enrollment update. I had a question, though, on that Phase IIb and how to interpret the results? I guess, I'm kind of wondering since this is such a different paradigm, how would you compare to standard of care? And perhaps maybe a little color on what would be a win? Is it statistical significance of mean MADRS changes at 3 weeks? Or would you be compelled by response rates and durability for a relatively large percentage of patients relative to standard of care?

George Goldsmith, Chairman and Chief Executive Officer

Charles, thanks so much for a great question as usual. I think that our focus on looking at Phase II is really to help inform us and the field in general about the durability of response, the extent of response for whom. And so our goal is to really be understanding in this study, the 3-week MADRS but also looking at the durability. These are things that have never been looked at before in such a large systematic study. So our real core focus here is to learn on both durability and the extent of difference between a 10 milligram and a 25 milligram. Remember, the whole purpose of this study is to really define a dose to go into a pivotal program. And so that's really where our focus will be. And also to identify the patients who are most likely to respond, again, as part of our responsible science development process. Did that answer your question?

Charles Duncan, Analyst

Yes, that sounds reasonable. This is a Phase IIb study, not a pivotal one. However, I would like to ask you to speculate about the future regarding the unmet need in treatment-resistant depression. Given that this is a substantial Phase IIb study, do you think it's possible that we would only need to conduct one Phase III study, or do you believe it would be wise to plan for two Phase III studies?

George Goldsmith, Chairman and Chief Executive Officer

I believe you're correct that this is a different type of program. While there might be results from our Phase II that could allow us to consider this Phase IIb as pivotal, followed by an additional pivotal study, I don't think it's wise from a patient care perspective. We need to ensure we have enough trained therapists and understand how to implement this at scale. All of this will require a substantial Phase III program, and I believe we are well funded for that. Our main focus is on conducting the science, understanding who responds, and preparing the commercial environment. While we can't predict the study results, our objective is to move into Phase III as quickly as possible, making it an essential step towards patient availability, assuming the data supports it.

Charles Duncan, Analyst

Yes, assuming the data is positive, I'm sure you'll be able to interpret it. Last question for Piers, though. Relative to R&D expense, I think it came in at $11 million or so, a little bit higher than FactSet, which I think is a good thing because it seems like you're doing a lot of work with 360. But I guess I'm wondering just a little housekeeping, what would you set as kind of a run rate here for quarterly R&D expense?

Piers Morgan, Chief Financial Officer

Thank you, Charles. We don't provide guidance on projected spending. It's important to note that there will be some volatility as we aim to complete Phase IIb by the end of this year, followed by a significant increase if Phase II concludes well with the FDA, allowing us to start Phase III in 2022. Additionally, we plan to begin our sponsored studies in a few other indications with Phase IIa studies within the next three months. Therefore, we anticipate continued volatility in our quarterly R&D expenditures.

Operator, Operator

Our next question comes from the line of Ritu Baral from Cowen.

Ritu Baral, Analyst

Just actually a follow-up on some of Charles' questions. George, can you talk us through the powering and the statistical plan as it stands right now for the primary analysis, especially between the two doses? Like is it 25 milligrams versus 1 milligram and 10 milligrams versus 1 milligram? Or is it sort of pooled 25 milligrams plus 10 milligrams activity versus 1 milligram? And then as has been the case for other trials in novel antidepressants, there's a lot of focus on your 12-week efficacy endpoint. Can you help us frame how we should be looking at the efficacy at 12 weeks or earlier because you mentioned multiple time points that 12-week time point versus the primary 3-week primary endpoint?

George Goldsmith, Chairman and Chief Executive Officer

Certainly. The protocol we developed involved collaboration with the team that conducted the STAR*D trial, which is the largest TRD trial. We worked together to create and review the protocol with regulators from both sides of the Atlantic, resulting in a unified protocol across ten countries and 22 sites. We decided to examine dosages of 25 milligrams, 10 milligrams, and 1 milligram, using a progressive hierarchical assessment. We were encouraged by the data from the New England Journal, which, although from a different population, was still focused on the MDD population. In that study, when 1 milligram was administered alongside a leading antidepressant, we noted a distinction between the 25 milligrams and 1 milligram dosages. We are excited about what this design could reveal regarding the comparison of 25 milligrams to 1 milligram and 10 milligrams to 1 milligram. The aim is to identify the safest and most tolerable dose that delivers the greatest impact on MADRS and also evaluate the durability of effects. Regarding the 12-week endpoint, it's important to remember that this is a single dose study, and we are really attempting to understand the durability of the results. We've observed some variability in smaller studies, so we're focused on understanding durability across different times. In agreement with regulators, we've planned to assess durability at 1 week, 2 weeks, 3 weeks, 6 weeks, 9 weeks, and 12 weeks, with the secondary measure occurring at 12 weeks to evaluate the response durability. I hope this clarifies your question.

Ritu Baral, Analyst

It does. And then I did want to ask about something that you mentioned in your prepared remarks, the new indications that you're thinking about. I think you had mentioned anorexia, bipolar and severe TRD as investigator-sponsored studies. But sort of as you think about addiction in these indications, what does the company, from a strategic perspective, a funding perspective and IT perspective, consider the most promising additional indications?

George Goldsmith, Chairman and Chief Executive Officer

So at this point, what our true north at COMPASS is very simple. We're looking at areas of high unmet need that exist in patient populations that are simply not being addressed effectively by existing treatments. And so when you look at things like PTSD, anorexia, severe TRD, these are all targets. We're also obviously doing some work that we've disclosed with Sheppard Pratt looking at bipolar II. So I think our strategy is to generate signals. We have support and preclinical work in all of these areas. And our goal is to simply be driven by a huge unmet patient need and where there's a scientific rationale for us to approach these areas. And we'll be disclosing more as we move forward around what those specific areas are that will be part of our sponsored research program later in the year.

Operator, Operator

Our next question comes from the line of Josh Schimmer from Evercore ISI.

Joshua Schimmer, Analyst

Maybe to follow up on the question Ritu was asking about some of the additional indications you may explore. Do you expect that you would pursue development with COMP360? Or would you wait to see if there's another molecule in the portfolio that may be better suited for those settings? And then separately, maybe you can talk a little bit about your efforts to support capacity expansion in treatment centers to accommodate the eventual demand for psilocybin therapy?

George Goldsmith, Chairman and Chief Executive Officer

Sure. So with regard to the first question, I think that what drives us again is this focus on unmet need. And we're going to actually be progressing wherever we see that as a possibility. And so that's what's been driving the focus. I think because you did a two-part question, I'd like you to go back and make sure I've answered the first part, Josh?

Joshua Schimmer, Analyst

Knowing that you have a number of psychonomic compounds in the portfolio...

George Goldsmith, Chairman and Chief Executive Officer

Thank you. Our primary focus has always been to address the significant unmet needs in patient care. From the beginning, we've aimed to provide solutions that can genuinely help patients, and we believe psilocybin has the potential to do just that. While there may be more optimized options available in the future, our immediate priority is exploring COMP360 since it offers the quickest route to supporting patients. Our mission is to enhance patient lives, and initiating with COMP360 is our current strategy. We also have other developments in the pipeline from our discovery center that present varied characteristics, but at this moment, COMP360 is our main focus. Regarding capacity building, it's quite simple. As I mentioned about our Phase III program, we aim to expand our capacity by enhancing the Phase III program and investigating additional indications. This approach not only helps us develop therapies but also enhances our capabilities. Once we provide more details on our Phase III infrastructure after our end-of-Phase II meeting, it should become clearer. We're dedicated to ensuring we have the capacity to convert promising results into tangible benefits for patients. Thank you.

Operator, Operator

Our next question comes from the line of Neena Bitritto-Garg from Citi.

Neena Bitritto-Garg, Analyst

My first question is about how you are ensuring that patients attend their follow-up visits to maintain a strong data set at the 12-week mark. Additionally, could you share how you will manage dropouts or patients who are lost to follow-up in your analysis? My second question pertains to your discovery and formulation work. Can you discuss the key characteristics you are seeking in your next-generation molecules, such as onset of action, durability of the psychedelic experience, and intensity of the experience?

George Goldsmith, Chairman and Chief Executive Officer

I'll take the first question and hand it off to my colleague, Lars, for the second. In terms of follow-up visits and compliance, we have an unusual aspect here where we have a single dose that's provided to patients. And the follow-up has actually been quite effective. With COVID, we actually moved to quite a bit of that follow-up being conducted remotely, again, because there was a single dose provided. So we don't anticipate that there will be a lot of issues relative to compliance, either in the trial or in the real world, which I think is incredibly important given the unmet need. So that's how we'll be doing that. We have not disclosed how we'll be handling some of the other aspects. So we will do that in the future in terms of lost to follow up, et cetera. Lars, would you like to take the...

Lars Wilde, Unknown

Yes, absolutely. On your third question on our discovery work. So as we mentioned, indeed, we are developing novel psychedelic and psychedelic-like compounds, and we're having several goals with that. I think the overarching goal is actually to answer a scientific question. As you know, there's a lot of enthusiasm in the field, but we need to caution everyone that we do not know how short an experience can be while still maintaining durable antidepressant effects. Because all the work over the past 20 years and a lot of the work in the 1950s, '60s, '70s and '80s have been done with long-duration psychedelic compounds such as psilocybin, LSD and mescaline, of which psilocybin is the shortest. So we don't know if significantly reduced experience might convey the same patient benefits. Therefore, we're creating different novel molecules that will have different durations from, I think, at the lowest end for potentially half an hour for an entire experience, all the way up to four hours. And then eventually, we need to run mechanistic trials in the form of Phase 0 trials to see if we can pick up typical signatures in terms of physiology changes in human subjects that let us infer antidepressant and anxiolytic benefits in patients. In terms of other properties we're looking at, the core target for us is the 5-HT2A receptor. To some extent, the 1A receptor. There are other receptors that modulate the experience and work in tandem in the serotonin system such as, for example, the 2C receptor that's based on agonism properties of molecules that can cause slight anxiety changes. So one might want to modulate activity at that receptor depending on the indication being treated. And then there's also the risk of 5-HT2B binding. There's a lot of, I would say, enthusiasm on the idea of microdosing and running clinical trials with microdosing. I think we need to caution everyone to do that. LSD is most widely used for that purpose. LSD binds quite strongly to the 5-HT2B receptor, and it's well understood that drugs like fenfluramine that bind to the 2B receptor at chronic dosing can lead to cardiovascular problems in terms of heart valve thickening, which can eventually lead to a heart attack. Therefore, if one wanted to explore a chronic dosing regime, one would need to, for example, improve 2A agonism over 2B agonism. And these are some of the elements where we're exploring. And then the goal is to move them very quickly through the toxicology studies and basic preclinical screening and then do a lot of the mechanistic work in humans because, obviously, the experience matters. I mean that's the last thing I'm going to say. Some of these very short-acting tryptamine-like compounds need a full dissociation, where the patient doesn't have the ability to actually process deep-rooted psychological issues as happens with psilocybin. We believe that in itself has a strong therapeutic character that's worthwhile exploring and researching. And therefore, we try to preserve some of these elements that the patient actually has sufficient time and the experience to work through personal problems. We believe that actually this very strong dissociation might be traumatizing to patients. Overall, the goal is to be in the clinic with the first three to five molecules within the next 18 to 24 months, and then follow on with molecules in the years thereafter.

Operator, Operator

Our next question comes from the line of Esther Hong from Berenberg.

Esther Hong, Analyst

Congratulations on the progress. A couple of questions. My first question is regarding the enrolled patients in the Phase IIb study. Do any of them have comorbidity to other symptoms like other indications like social anxiety? And will there be an analysis of how COMP360 may have improved symptoms for something such as social anxiety on top of treatment-resistant depression?

George Goldsmith, Chairman and Chief Executive Officer

We have been very focused on recruiting patients with depression, specifically those with treatment-resistant depression validated through medical records. There is often comorbid anxiety, and we are using the HAM-A to assess the impact on that comorbidity. Other studies have shown significant improvement, not only in the primary condition but also in anxiety. Over 70% of patients experience this comorbidity. While we haven't specifically called out social anxiety, we will have the largest data set ever created in this area. We will analyze it carefully to understand which patients will benefit most and to inform our future program.

Esther Hong, Analyst

Yes, it seems there could be a lot of valuable insights from this data set. Additionally, regarding the patent challenge in the U.K., could you provide any further details?

George Goldsmith, Chairman and Chief Executive Officer

The patent challenge comes from the same group that initiated the post-grant review of our first U.S. patent, which was dismissed on the merits in August 2020. This new challenge to one of the U.K. patents seems to repeat many of the arguments from previous unsuccessful challenges. The U.S. patent office has considered the request and found it does not pose a barrier to patentability. This particular challenge pertains to the U.K. patent and involves a nonbinding opinion from the U.K. intellectual property office questioning some aspects of the claims in that patent. The opinion resulted from a request from a third party and is merely a nonbinding opinion; it does not invalidate our patent or any of its claims. We remain confident that this is simply part of the environment we operate in, and we stand firm in the strength and defensibility of our patents. Interestingly, while challenging some aspects of this opinion, it also supported others.

Esther Hong, Analyst

Got it. And then may I ask who the third party is? Is it the same as the group that challenged in the U.S.? That's my last question.

George Goldsmith, Chairman and Chief Executive Officer

Yes, it is.

Operator, Operator

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

Patrick Trucchio, Analyst

I have a couple of follow-up questions. Firstly, it seems that MDMA is on track for approval in PTSD in 2023. Considering the differences in mechanism, delivery, and indication, I would like to know what insights, if any, have arisen from the MDMA Phase III program that COMPASS might apply to its potential Phase III TRD program or other possible clinical trials in the COMP360 program?

George Goldsmith, Chairman and Chief Executive Officer

Yes. At this point, Lars, please go ahead and address that.

Lars Wilde, Unknown

Yes. I want to express our satisfaction with the development. On a broader scale, this is another significant milestone in mental health. We see the emergence of racemic ketamine clinic providers, the approvals of Spravato for treatment-resistant depression and suicidal thoughts, and now MDMA is nearing approval following impressive Phase III results for chronic PTSD. Notably, the remission rates in the study exceeded 60%, with a p-value of 1 in 10,000, highlighting the potential of psychedelic therapies. One key lesson has been the importance of incorporating payer feedback into our study designs. Our primary goal is to make psilocybin therapy accessible to as many patients as possible, which necessitates full reimbursement. We have engaged with payer systems in Europe and North America since our inception to ensure we develop the necessary data for safety, efficacy, approval, and commercialization. This is evident in the MDMA studies, which employ a heavily therapeutic approach. We focused on the essential elements for efficacy in our study, and we learned we could reduce the number of therapists needed, from two per patient to one. We believe this model is scalable and are considering simultaneous group administration. We also gathered robust safety data in the Phase I trial with up to six participants. Currently, we are involved in a study under our IND with patients diagnosed with major depressive disorder and cancer in the United States, treating groups of four patients through preparation, dosing, and integration sessions. This approach seems to be progressing well. In terms of patient numbers for the impressive Phase III results, that study included only 80 patients, and the second Phase III has a similar size. We are conducting a larger Phase IIb study, which will provide valuable insights for determining the size of our Phase III trial. I hope this addresses your question.

Patrick Trucchio, Analyst

Yes. Yes, that's helpful. And then just in the press release, you highlighted hires in clinical science, regulatory affairs, clinical safety, quality and manufacturing in preparation for Phase III new compounds and additional indications. So wondering if you can give us some additional details on these new hires and on those preparations that are underway for the Phase III program and on the potential studies, any additional indications?

George Goldsmith, Chairman and Chief Executive Officer

Our focus remains on attracting world-class talent, and this is evident in our recent hires. Our new Head of Safety has a strong background in drug development from the FDA and experience in psychiatry. Similarly, our Head of Quality is skilled in designing quality processes within our organization. We’ve brought these leaders on board at the vice president level or higher to enhance our execution as we advance into our studies. Guy Goodwin, our new Chief Medical Officer, exemplifies our commitment to academic rigor, particularly in depression and bipolar disorder, with a background as the former Chairman at Oxford. Danielle's expertise, coming from Verily and Google, will help us integrate our approach to therapy development, combining digital, medicinal, and therapeutic aspects. Our goal is to develop new clinical care pathways for patients who are underserved, and this is where our team is concentrating their efforts. We are now over 100 full-time employees, which is exciting, and it's rewarding to see our team growing. Our capabilities and the range of talent we have are truly unique.

Patrick Trucchio, Analyst

Yes. I have a quick follow-up regarding COMP360 and TRD. How soon after the Phase IIb top line data do you expect to have the end of Phase II meeting? What would you consider the ideal outcome from that meeting?

George Goldsmith, Chairman and Chief Executive Officer

We have been evaluating our Phase III program with regulators based on various scenarios for over a year now. Our goal for Phase III is to present all relevant data, including the Phase II meeting results and all safety data from additional studies, to the FDA. As you know, we prioritize execution, so we aim to proceed as quickly as possible, but not at the expense of thoroughness. We are well-prepared for this process and intend to minimize the gap between the completion of Phase II and the initiation of Phase III. We are also collaborating with a CRO and enhancing our infrastructure for Phase III. Following our meeting with the FDA, which we anticipate will occur in the first quarter of next year, we will build upon that foundation to move into Phase III as swiftly as possible. Ultimately, the focus is on the data, and timelines may change based on what we learn from it. That's the purpose of the study, and we are committed to being an evidence-based company.

Operator, Operator

Our next question comes from the line of Bert Hazlett from BTIG.

Robert Hazlett, Analyst

Congratulations on the progress. I look forward to the upcoming IIb data. Regarding the additional indications you mentioned, such as anorexia and PTSD, do you see the management of these patients being similar to TRD, especially in terms of preparation, administration with therapist support, and integration afterwards? You touched on this earlier, but could there be potential group integration sessions or any changes you might consider for these additional indications?

George Goldsmith, Chairman and Chief Executive Officer

Okay. So I think I'll start with the first question, and certainly, Lars can weigh in on the IP issue as well after that. So on the first question, the reason we're doing these smaller studies with independent investigators, and we'll be starting smaller sponsor sites is to learn about what the patients need broadly. We absolutely will have to prepare. We'll absolutely support people through the dosing session and the administration of psilocybin therapy and the integration. What happened specifically in the patient population suffering with PTSD as opposed to with anorexia will obviously need to be calibrated. And that's really what we're doing. It's part of the responsibility that Danielle will have as we really look at how to take the broad structure and customize it for different patient populations, working closely with the subject matter experts, key opinion leaders in these areas as we're already starting in our IIS study. So this is clearly a core program that will be then optimized for those patients based on what we learned through working with external experts as we have all along. I hope that answers that part of the question, Bert.

Robert Hazlett, Analyst

Yes, it does. And just regarding the patents and whether this might have any effect on pending application?

George Goldsmith, Chairman and Chief Executive Officer

Again, I will turn it over to Lars. And Lars, if you want to answer that question?

Lars Wilde, Unknown

Yes, absolutely. Bert, I hope you understand that we do not comment on ongoing patent prosecution in detail. Of course, we are very confident in our strategy. We have four patent grants still pending. We don't expect any major impact from the current nonbinding challenge.

Operator, Operator

Our next question comes from the line of Jason McCarthy from Maxim Group.

Jason McCarthy, Analyst

A lot of questions asked and answered, but I want to go back to something, I think, it was Josh's question about capacity. Can you talk about if there will be any role for third-party clinics in terms of acquiring or rolling them up to bring them under the COMPASS umbrella? Or will it be purely building out infrastructure on your own, the way COMPASS sees that?

George Goldsmith, Chairman and Chief Executive Officer

We plan to work closely with delivery partners and do not want to hinder any deployment. Our aim is to collaborate with a strong group of partners to improve care based on our understanding and continuing data analysis. Working with a diverse set of partners is crucial to our strategy as we adapt to new clinical care models in psychiatry, including MDMA and ketamine. We are committed to engaging effectively with a wide range of partners and, regarding our future commercial plans, we emphasize that we do not want to act as a bottleneck.

Operator, Operator

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

Elemer Piros, Analyst

I would like to ask if you could discuss the cancer study, particularly the investigator-initiated trial. What benchmarks would need to be met for you to consider investing in this program? Additionally, have you looked into the regulatory framework? What endpoints might be applicable, and what duration of treatment or observation would be necessary from a regulatory standpoint?

George Goldsmith, Chairman and Chief Executive Officer

Yes. So obviously, we're very focused on working with regulators about how to think about these new areas. Obviously, these patients are suffering with MDD, often with comorbid anxiety as we hear. And in many ways, these are patients who are very difficult to treat, right, given their other physical issues. So I think our goal in this was to see if, in fact, we could make a durable impact in a study with a different delivery model. And this is the first patient study that actually did simultaneous preparation, administration of psilocybin therapy among four people in separate rooms, but simultaneously, and integration. So this is a pretty different delivery model that is actually not terribly distinct from models in other forms of cancer care and support groups. We will be seeing those data later. And I think what we are looking for is movement in all of the traditional measures. Again, we have a MADRS measure here. There's a 3-week and an 8-week endpoint. And we're going to also be looking at the qualitative changes in patient experience and that will help inform an ongoing program following a set of discussions with regulators based on the data. Again, sorry to be boring, but we're all about evidence. And I think there have been interesting small studies at this point. What we want to do is to start the conversation about bringing this model to patients at scale. And that study is first step in doing so, working closely with the Maryland Oncology/Hematology group at Aquilino Cancer Center.

Operator, Operator

At this time, I'm showing no further questions. I would like to turn the call back over to management for closing remarks.

George Goldsmith, Chairman and Chief Executive Officer

I'd very much like to thank all our investors for the questions, the support and making a difference in patients' lives. We're very much focused on this and greatly appreciative of your support, and appreciate the very thoughtful questions today. So with that, I and my colleagues at COMPASS thank you.

Operator, Operator

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