Earnings Call Transcript - CMPS Q1 2025

Steve Schultz, Senior Vice President of Investor Relations

Ladies and gentlemen, thank you for being here. Welcome to the COMPASS Pathways First Quarter 2025 Earnings Call. This call is being recorded. After the prepared remarks from the speakers, we will have a question-and-answer session. I would now like to turn the call over to Steve Schultz, Senior Vice President of Investor Relations. You may begin, sir. Welcome all of you. And thank you for joining us today for our first quarter 2025 results conference call. Again, my name is Steve Schultz, Senior Vice President of Investor Relations at COMPASS Pathways. Today, I'm joined by Kabir Nath, our Chief Executive Officer; and Teri Loxam, our Chief Financial Officer, who will have prepared remarks. In addition, Dr. Guy Goodwin, our Chief Medical Officer; and Dr. Steve Levin, our Chief Patient Officer, will be available for the Q&A. The call is being recorded and will be available on the COMPASS Pathways' Investor Relations Web site shortly after the conclusion of the call and will be available for a period of 30 days. 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 most recent quarterly report on Form 10-Q filed with the US Securities and Exchange Commission 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 upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements, even if our estimates or assumptions change.

Kabir Nath, CEO

Thank you, Steve. Good day, everyone. And thank you for joining us. Recently, we announced the completion of dosing of all participants in Part A of our 005 trial, the first of two pivotal Phase III trials, which marks an important milestone in our mission to address the pressing unmet need in treatment resistant depression or TRD. We look forward to sharing the six week top line results in late June. As we've guided before, these results will include three key efficacy measures for the six week primary endpoint. The difference between the treatment arm and the placebo arm in change from baseline on MADRS, the associated p-value and confidence interval. A positive treatment effect of six weeks based on a single dose of COMP360 would represent a meaningful improvement in durability compared with the very limited options available to TRD patients today. From a safety standpoint, the independent DSMB reviews unblinded safety data on a regular basis and has been doing so since the trial started. Since the trial remains blinded through 26 weeks, we have requested the DSMB to provide a comment on suicidality. We believe that these data, if positive, should provide investors with further clinical validation of COMP360's treatment potential in TRD. The second Phase 3 trial, COMP006, which has three active arms could further define the COMP360 profile with data on a second initial treatment, which we believe could potentially extend durability or deepen response. Enrollment is going well in 006, and I'll remind you that, that is a global trial, and we're on track for the 26 week results in the second half of 2026. Also during this quarter, 52 week safety and efficacy data from the COMP004 study was published in the Journal of Clinical Psychology. This was an observational 52 week follow-up from the Phase 2b 001 and 003 trials of COMP360 suicidal treatment in 252 patients with TRD. This study showed that for the full patient population, a single 25 milligram COMP360 psilocybin dose offered long term benefits with an average time to depressive event of over 12 weeks. A post hoc analysis of the subset of 58 participants that continued in the long term follow-up study shown time to depressive event for those patients treated with 25 milligrams was substantially longer at 189 days. While there may be some responder bias associated with this subgroup, this is impressive data in a difficult to treat and highly refractory patient population, and we believe shows the potential of COMP360 to be a clinically differentiated treatment that is both rapid acting and with meaningful durability. The Phase 3 program is designed to confirm the durability and safety profile, which, if successful and approved, could be a groundbreaking option for individuals who suffer from TRD. In addition, as we plan for the commercialization of COMP360, we'll be working to ensure that we understand the commercial opportunity, initially, by focusing on how COMP360 will be delivered in a broad spectrum of settings of care. One way we are achieving this is through developing relationships with various provider types through our strategic collaborations, which we previously discussed. In line with this, we announced an additional strategic collaboration this quarter with HealthPort. HealthPort is a community health center that serves low income individuals and is focused on providing broad and equitable access to innovative mental health treatments, which could potentially include COMP360 if approved by the FDA. HealthPort is our first collaboration that is focused on community based delivery to underserved patient populations. Beyond this, our efforts with our existing collaborations are generating considerable value. We have gained deep insights into the patient experience and care pathways for those living with TRD within high volume interventional psychiatry practices, hospital systems and integrated delivery networks. We've strengthened our understanding of the clinical, operational, economic and administrative considerations of implementing and scaling analogous interventional psychiatry treatments such as Spravato. This enables us to understand and prepare for the launch and adoption of COMP360 if approved. And we're building a strong appreciation of how training and continued education is being delivered and how best to integrate COMP360 in the post approval setting. These are just a few of the many examples of meaningful insights that we are using to inform our strategy for launch and post launch scaling.

Teri Loxam, CFO

Thank you, Kabir. After our January financing, we are in a very strong financial position. At the end of March, we had cash and cash equivalents of $260 million, which we expect to fund our operations at least through the planned 26 week data readout from our second Phase 3 trial, COMP006, which is expected in the second half of 2026. This compares with $165 million at the end of 2024. Debt under the Hercules loan facility was $30.5 million at the end of the first quarter. Cash used in operations for the first quarter was $45.7 million and we expect net cash used in operations for the full year 2025 to be within the range of $120 million to $145 million. Again, as Kabir said earlier, we eagerly await the results of our first Phase 3 data as we know you're waiting for it as well. As a reminder, this is the first of three expected data readouts from this program over the next 18 months. Based on our data to date, including the recent 52 week follow-up data from our Phase 2b trial, we believe COMP360 could represent a clinically differentiated treatment option that is rapid acting with the potential for paradigm changing durability. We also continue to work toward a final design for our late stage clinical program in PTSD and look forward to updating investors when that design is finalized. Given the high unmet need and limited current treatment options, we see a significant commercial opportunity in PTSD.

Kabir Nath, CEO

Just to build on both Guy's points together, Charles. Even in light of the 2b data, the FDA was still not concerned about the likelihood of suicidality in Phase 3. They fully understand that this is a core feature of the disease.

Guy Goodwin, Chief Medical Officer

I mean, Kevin, this data is not as complete as we would like it to have been. So I'd like to start with that disclaimer really. It's not a definitive study, a definitive follow-up study by any means for various reasons. But what it does show is a difference between the durability of the three doses. This is most clearly seen in the subgroup who completed the study. And they, as we mentioned earlier, are a little unrepresentative, but nevertheless they did demonstrate some patients who received 25 milligrams can last as long as six months following treatment. And that is much less likely in people who've received lower doses. So I think it reiterates our conclusion from the Phase 2 study that 25 milligrams is, for the time being, the preferred dose that we think will carry forward and will be the one that we obviously used in the Phase 3 program.

Paul Matteis, Analyst

It is clear that due to the disclosure of top line results and your cautious approach to avoid influencing the 006 trial, comparing outcomes across studies will be challenging, which makes sense. Regarding the actual efficacy difference on MADRS, one issue in the psychedelic field is the significant variability and placebo effect seen in different trials. What is your baseline assumption, considering the study is blinded, about the potential placebo effect in this study? How might that help us understand and contextualize this effect size compared to what has been reported in other studies?

Guy Goodwin, Chief Medical Officer

Our estimate was based on findings from a previous study of MDD in Switzerland involving COMP360. Our own data came from a group that received 1 milligram. We evaluated whether patients in that group had any sort of psychedelic experience and considered a subgroup with the least experience to estimate likely placebo responses. In this field, we typically anticipate a placebo response in well-conducted trials. The placebo group does not receive nothing; they get considerable attention and frequent hospital visits, which are perceived positively by patients. Therefore, a placebo response is expected, along with regression to the mean. Generally, one would expect a placebo response, and the variation observed between the placebo and active group can be attributed to the drug's effect, which is our primary focus. We would be pleased with results exceeding three on the MADRS scale, as that indicates clinical significance, and anything beyond that would be a bonus.

Patrick Trucchio, Analyst

First, just regarding the COMP360 TRD program and the 52 week observational follow-up study. I'm wondering how we should interpret those data in the context of your pivotal program or in the potential commercialization of COMP360 in TRD? And then also in the pivotal TRD program, is there tracking or use of antidepressants or other psychotropic medications post dosing the trials, and how might that inform your durability or safety analyses? And then separately, I'm wondering regarding PTSD, have you initiated regulatory interactions around PTSD program design? And if so, what feedback have you received?

Kabir Nath, CEO

So we are clear that we believe we're doing something unique. And if approved, what we have is paradigm breaking transformational for the treatment of serious mental illness. And our commitment is to do that ourselves in the US if we can, and potentially some other select geographies at the moment. So from our perspective, COMPASS is set up to commercialize COMP360, if approved, and to build from there. And I have no particular comment on big strategic intent at this point.

Steve Levine, Chief Patient Officer

So first just as a reminder, part of the efforts with creating this network of collaborations is for them to reflect the broad array, the spectrum of where mental healthcare is delivered in this country. Within the existing collaborations, we did not feel there was adequate representation of sites that serve underserved populations, and HealthPort is a very high quality example of a certified community behavioral health clinic that specifically addresses the unmet needs in marginalized and underserved populations. There are some assumptions that I think are common that community based mental health clinics are not able to deliver newer or more innovative treatments. And it is the fact that HealthPort has been able to deliver Spravato to patients, esketamine, and are highly motivated to make sure that there is not a widening of existing healthcare disparities and a lack of access for their population if new treatment options are approved. And so they have some experience already with interventional treatments and are excited about and motivated to be operationally ready to deliver new treatments if approved.

Athena Chin, Analyst

Given the potential pharma tariffs, can you provide additional color on your manufacturing supply chain and whether there has been any FDA inspection of your manufacturing centers?

Kabir Nath, CEO

So yes, currently, product is manufactured in the UK. We have always planned and are working on plans to add an additional manufacturing capability in the US for commercial supply. So those plans were already underway and we are moving on those. These are sites that have extensive experience of manufacturing, not just for us but our very well established CDMOs for a wide range of pharmaceutical manufacturers, so have had multiple inspections over the years.

Teri Loxam, CFO

And Athena, it's probably worth mentioning that from a manufacturing perspective, compared to other biotechs or pharmaceuticals, this is a pretty straightforward process and a pretty small quantity of material. And so it's not really at the top of our minds in terms of risks, we're mitigating any risks we have. But as Kabir mentioned, as we near commercialization that is currently the plan.

Kabir Nath, CEO

This is a typical small molecule. Since we haven't established a price yet, if there is a tariff on any cost of goods, we can consider that when determining the selling price in the future.

Guy Goodwin, Chief Medical Officer

The criteria for recruitment remain unchanged, and we are not actively monitoring the actual baseline characteristics. We are unaware of the specific data subset, but we know that we are recruiting patients using the same criteria. Therefore, there is no reason to believe they would be any different.

Kabir Nath, CEO

And on PTSD, Patrick, we will be reviewing and discussing those plans with the agency. But as you'll recall, we choose not to give specific feedback on what our discussions are with the agency. Thank you very much. So thanks, everyone, for your time and attention this morning. I think to state the obvious, we are very eagerly awaiting data next month. We know that you are as well. But we remain confident in that data, in that first six week primary endpoint readout of 005. And we continue to make very good progress on recruiting in 006 as well and reconfirm the timelines for that for data in the second half of 2026. So with that, thank you, and we look forward to pressing on and executing and potentially bringing forward a paradigm changing treatment for TRD.

Operator, Operator

Thank you for attending today's call. You may now disconnect. Goodbye.