Definium Therapeutics, Inc. Q3 FY2022 Earnings Call

Good day, and welcome to the Mind Medicine Third Quarter 2022 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Robert Barrow, Chief Executive Officer and Director at Mind Medicine. Mr. Barrow, you may begin your conference.

Thank you, operator, and good morning, everyone. Welcome to MindMed's Third Quarter 2022 Financial Results and Corporate Update Conference Call. Prior to market open today, we issued a press release with a summary of our results for the third quarter of 2022. The press release reporting our financial results is available in the Investors and Media section of MindMed's website and our quarterly report on Form 10-Q for the quarter ended September 30, 2022, is planned to be filed today with the Securities and Exchange Commission. Joining me today is Schond Greenway, our Chief Financial Officer; Dr. Dan Karlin, our Chief Medical Officer; and Dr. Miriam Wernli, our Executive President. During the course of today's call, I will provide an overview and update on our business. Then Schond will review financial results for the quarter ended September 30, 2022, followed by Q&A. Before we begin, let me remind you that during this conference call, we will be making forward-looking statements. Company's actual results may differ materially from those expressed in or indicated by such forward-looking statements. For a description of risks, please refer to our recent filings with the Securities and Exchange Commission. During the course of the third quarter, we continued to make significant progress across our business. Getting to MM-120 and LSD programs, in the third quarter, we dosed the first patient in our Phase IIb dose optimization study of MM-120 in the treatment of generalized anxiety disorder. Study enrollment has continued to progress according to plan, and we remain on target for a top-line readout in late 2023. In September, results from the LSD ASSIST study, which is a Phase II placebo-controlled investigator-initiated clinical trial of LSD in the treatment of anxiety disorders conducted by our collaborators at University Hospital Basel, was published in the peer-reviewed scientific journal Biological Psychiatry. Top-line results in 46 patients with clinically significant anxiety demonstrated the significant, rapid, durable and beneficial effects of LSD and its potential to mitigate symptoms of anxiety and depression. Enrollment in our Phase II proof-of-concept trial of low repeated administration of MM-120 in ADHD has also continued to progress and remains on track for a top-line readout in late 2023. With respect to our MM-402, or R(-)-MDMA program, we continue to progress preclinical R&D efforts in preparation for the initiation of our Phase I clinical trial in 2023. Additionally, through our collaboration with University Hospital Basel, in the third quarter, we initiated a Phase I pharmacokinetic and pharmacodynamic investigator-initiated trial of R(-)-MDMA and MDMA in healthy volunteers. This study seeks to assess two dose levels of R(-)-MDMA and one dose level each of racemic MDMA and S-MDMA, and we expect it will provide valuable insights into the clinical activity of MM-402 as we progress our sponsor development program targeting core symptoms of autism spectrum disorder. Additionally, our external collaborations and early R&D activities have continued to progress, including the investigator-initiated study of LSD in the treatment of major depressive disorder being conducted at University Hospital Basel. Our collaboration with labs at UHB continues to offer the opportunity to generate modern, high-quality data demonstrating LSD's clinical activity in brain health disorders and continues to provide useful insights to inform the potential future direction in MM-120's development. We have continued the efforts disclosed in our second quarter earnings call to further streamline our operational and financial efficiency, and we continue to prioritize and focus our current development efforts and resources on MM-120 and psychiatric indications in MM-402. I would also like to take a moment to discuss our intellectual property position and strategy. As you are all aware, LSD in its free base form was discovered in the 1930s by Sandoz chemist Albert Hofmann. Accordingly, IP is not available on LSD free base. However, we believe we have made meaningful improvements and innovations on the original form of LSD and the development of our proprietary product candidate MM-120. This includes advancements both on the active pharmaceutical ingredient, LSD d-tartrate, and dosage forms of LSD d-tartrate that we believe are optimized to meet modern pharmaceutical standards. In the third quarter of 2022, we converted several nonprovisional patent applications, which we believe could play a central role in the protection of MM-120. Should the claims in those applications be granted, their first expiration date would be in 2042. We continue to retain all rights to our intellectual property, clinical data and manufacturing rights that we have filed on our product candidates, and we'll continue to aggressively protect and expand our IP portfolio seeking to maximize the protection of our product candidates should they eventually be approved for marketing. I'll now turn to our platform of digital medicine products, which is strategically aligned with our drug development programs, and we believe has the potential to facilitate broad and diverse access to our product candidates. Under our MindMed Session Monitoring System, or MSMS platform, we have continued to advance our clinical studies and regulatory engagement in the pursuit of eventual approval for elements of MSMS as a software medical device product. We look forward to providing further updates as we continue to progress our digital medicine strategy over the months ahead. We're incredibly pleased with the progress of our pipeline. And as we approach the end of 2022, we remain highly focused on the execution of our long-term plan and reaching key value-driving milestones, which are anticipated in the upcoming year. I will now turn the call over to Schond Greenway, our CFO, who will discuss our financial results.

Thanks, Rob, and thank you all for joining us today. We will now turn to our financial results for the third quarter ended September 30, 2022. As of September 30, 2022, cash and cash equivalents were $154.5 million compared to $133.5 million at December 31, 2021. During the quarter, the company regained compliance with NASDAQ listing requirements as well as completed financings through the use of our ATM facility and a public offering, which brought in an aggregate of approximately $60 million in gross proceeds. We believe these transactions not only brought large life science institutional investors into the shareholder register, which displays their confidence in both our clear plan for value creation as well as our management team, but also enhanced and strengthened the financial position of the company away from the vagaries of the macroeconomic risks of the current equity markets. We believe that our cash and cash equivalents on hand positions us to accelerate and advance our proprietary pipeline into later stages of clinical development and will be sufficient to meet our operating requirements into the first half of 2025. Our net cash used in operating activities was $37.3 million for the nine months ended September 30, 2022, compared to $38 million for the same period in 2021. Research and development expenses for the third quarter of 2022 were $7.8 million compared to $9 million for the third quarter of 2021. The decrease was primarily due to external costs related to the MM-110 research program and a decrease in preclinical activities, which was offset by an increase in internal personnel costs as we continue to expand in-house research and development capabilities. General and administrative expenses were $9.2 million for the third quarter of 2022 compared to $8.2 million for the same period in 2021. The increase was primarily related to issuance costs related to the company's public offering, which closed during the quarter. The net loss for the third quarter of 2022 was $16.5 million compared to $17.2 million for the same period in 2021. Lastly, I wish to reiterate that we believe we are continuing to execute a very efficient operation in terms of quarterly cash burn when compared to our largest peers in the space. As we have previously highlighted in our second quarter 2022 business update call, we intend to continue to conserve our cash, look for operational efficiencies, in particular in our discretionary spending where we can, while also focusing and prioritizing our support to our most precious resource: our development activities directed towards our key value drivers. I will now turn the call back to Rob, who will provide some closing comments.

Thank you, Schond. As we have demonstrated, the third quarter was marked by steady progress across our development pipeline. We have a highly talented and deeply committed team here at MindMed. We've continued to execute on our mission to be a leader in the advancement of novel treatments for brain health disorders. This concludes our prepared remarks, and I would now like to ask the operator to open the line for questions.

Our first question comes from Charles Duncan from Cantor Fitzgerald. I'll turn it back to Rob, who will provide some closing comments. Robert Barrow, CEO: Thank you, Schond. As we have demonstrated, the third quarter was marked by steady progress across our development pipeline. We have a highly talented and deeply committed team here at MindMed. We have continued to execute on our mission to be a leader in the advancement of novel treatments for brain health disorders. This concludes our prepared remarks, and I would now like to ask the operator to open the line for questions.

Congratulations on a good quarter of progress. I had a couple of questions. The first series on MM-120 and the second on R(-)-MDMA. I guess in terms of MM-120, thanks for the update, but I'm wondering if you could provide any additional color with regard to enrollment patterns, either in terms of patients beyond the first one or a few and then the number of sites. And if you could help us understand whether or not there is good investigator interest in this study.

Yes. We haven't provided and we're not in a position to provide specific guidance on the number of patients that have been enrolled to date, but enrollment has progressed well beyond the initial patient dosing that we announced in the third quarter. Additionally, sites coming online have continued to progress as well. We have a very clear path, and I believe we will be in a position where all of our sites will be online in the very near term. In terms of investigator engagement, we have very frequent engagement with our investigative sites and with the session monitors who are actually conducting the delivery sessions of our MM-120 treatment—our investigational drug treatment sessions, I should say. And we've seen an enormous amount of investigator enthusiasm for the study. So we are really optimistic about the enrollment and continue to believe we'll be on track to hit our readout in late 2023.

That's helpful, Rob. If I could ask one follow-up on MM-120, and that is in this investigator feedback that you referred to, have you heard any interest in other generalized anxiety disorder adjacency indications that you might consider looking at in the future that have even higher unmet need, if you will?

Yes. We've certainly heard both from our investigators and also from key opinion leaders, including our Scientific Advisory Board that we just met with this week, an extraordinary level of engagement and excitement about the potential in a broad range of psychiatric indications. So while we are certainly very keenly focused on getting to a J.V. approval first, the comorbidity with depression is something that is top of mind for all investigators and all the CNS researchers and professionals that have been working in this area. And we also—as you all know—we have additional studies ongoing with University Hospital Basel, including a study of LSD and major depressive disorder, which we anticipate will have clarity on timelines in the coming months. So we're very excited to see the continued progress across other indications and to certainly look at the opportunity. We believe the historical data supports the potential beyond just anxiety disorder. There is certainly a massive need in generalized anxiety disorder, but also in other therapeutic areas where we believe there's a possibility of pursuing that indication at a later date.

That makes sense to me. If I could hop over to MM-402 or R(-)-MDMA just quickly. I'm wondering if you could provide some of your perspective on the mechanistic rationale that may differentiate R versus S MDMA. And then just a little more granularity on timing. I think that you said Phase I could be in 2023, which is a big range. So I'm wondering if you think first half or second half.

Yes. I'll ask Dan Karlin, our Chief Medical Officer, to comment on the mechanistic aspects, and then I'll add on to that. Dan, do you want to comment?

Yes, sure, happy to, and it's an excellent question. So when we look at the differential activity of R(-)-MDMA versus S-MDMA—and, of course, racemic MDMA is a mixture of the two—S-MDMA appears to be primarily responsible for dopaminergic effects. So it seems like the S-enantiomer is largely driving the dopaminergic activity and some of the toxicity like hyperthermia and hyperactivity. That's been demonstrated repeatedly in animal studies. R(-)-MDMA, the R-enantiomer, seems to be largely serotonergic and responsible for the prosocial effects, social perception and social communication effects seen with racemic MDMA. Given that the core symptoms of ASD that we're targeting really relate to social cognition and social communication, it seems clear to us that R(-)-MDMA is the right one to target those symptoms. The other thing that's worth pointing out is that the current development paradigms for MDMA relate to its use as an adjunct to psychotherapy—an enhancer of the psychotherapeutic process. We see our R(-)-MDMA program as having a different mechanistic aim. Rather than simply enhancing psychotherapy for spectrum disorders, we see the R(-)-MDMA program as focusing on the on-drug effects in the real world for people with ASD, so that while on R(-)-MDMA they'll be better able to engage in social behavior or social communication and have better social perception. So it's a different paradigm: different dosing schedule, different endpoints and a different target symptom set.

And timing?

You covered it well, Dan. Yes, Charles, to your question about timing: at this stage, it is certainly looking like we will initiate our planned study in 2023. We have the ongoing study with University Hospital Basel, and we would like to see some preliminary results from that study to determine if it alters our design or any of the outcome measures we would want to add in our planned Phase I study. We are further refining those timelines and plans, and we'll certainly communicate those in the not-distant future once the more precise timelines are available.

And our next question comes from François Brisebois from Oppenheimer.

Dan, I'm on for Frank. I had a question just on the R(-)-MDMA program. I'm sorry if I missed this, but could you talk about the dosing strategy there? I think you mentioned one dose each of the racemate and S and two doses of R; could you just talk about the dosing strategy and any color there?

Yes, absolutely. So this is a randomized, placebo-controlled, double-blind crossover study. There are five treatment arms, including the placebo. We're testing doses of 125 milligrams of racemic MDMA and S-MDMA and 125 milligrams and 250 milligrams of R(-)-MDMA. So it's 24 participants, and these five different investigational drug levels will be administered in a randomly ordered sequence in the same patients, who will provide intra-patient comparisons both in terms of pharmacokinetics and pharmacodynamics between each formulation.

Great. And in your MDMA study, are you sharing at this time what core symptoms or endpoints you're going to be looking at, like in prior trials—social anxiety or any color there?

Yes. Social anxiety is certainly the core feature related to ASD that we believe would be most aligned mechanistically with the MM-402 program, and also the one where we are focused based on the regulatory precedent and the history of research in this area. So that is our current expectation: that we would be using similar endpoints that have been used in the past for breakthrough programs. Those programs didn't progress beyond pivotal studies, but we certainly believe mechanistically our R(-)-MDMA represents a unique pharmacology and opportunity to advance in this population. We look at the historical endpoints and the historical indication language as our primary target for treating the core symptoms—principally social anxiety—which is the core targetable set of characteristics in ASD.

Great. And finally, just in terms of the digital medicine products that you talked about, are you going to be using any of these products with the ongoing trials? Are we going to see any preliminary data in terms of patient journey or any of that?

Yes. Great question. The digital medicine products we are developing are not in use in our Phase IIb study of MM-120. We do have ongoing studies with our digital medicine products, including studies that look at a number of molecules, such as ketamine and LSD, and that's where our collaboration with University Hospital Basel continues to be particularly important. Given the ongoing research, we're able to include those digital medicine assets in some of the ongoing studies at UHB. That gives us a unique opportunity to study both the effects of LSD in various indications and its mechanistic activity, but also to generate robust datasets for our digital medicine products. We've seen very positive engagement with regulatory agencies that put us in a position to advance the MSMS approach.

Our next question comes from Elemer Piros from ROTH Capital Partners.

Rob or Dan, would you please help us to understand what is your IP strategy with R(-)-MDMA or broadly speaking, if you cannot be any more specific?

Yes, absolutely. It's a great question. A lot of the discussion around intellectual property is fairly consistent across these molecules that have been researched in the past. There's certainly no basic IP on R(-)-MDMA as a molecule in the sense that MDMA has been studied for a long time and the two enantiomers have been examined individually historically. That said, the message of using R(-)-MDMA in specific indications is something where we believe the data we have generated gives us an exciting IP approach, both in terms of methods of use, but also in terms of formulation and intersections with our digital medicine intellectual property. As with most of these molecules, when there's historical prior art on the baseline API, we build a multilayered, fortified approach to protecting our market position. We rely on regulatory exclusivity mechanisms from the FDA, pursue patents that we believe are differentiated in terms of delivery, formulation and methods of use, seek Orange Book listing where appropriate, and utilize mechanisms available to us to protect against potential generic entrants, including legal avenues if necessary. Ultimately, our strategy is to combine regulatory exclusivity and multiple patent layers alongside our proprietary clinical data and manufacturing know-how.

Okay. And would you be a little bit more specific on what sort of information would come out from the PK/PD trial conducted in Switzerland that would help you design the Phase I? What is your hypothesis there?

Yes, absolutely. Our core focus is treating core symptoms in autism spectrum disorder—social anxiety and social communication deficits—and this is where we see the prosocial effects of R(-)-MDMA in preclinical models and the prosocial enhancement signal for racemic MDMA in clinical studies. Our hypothesis is that R(-)-MDMA would demonstrate prosocial effects in healthy volunteers. It's important to highlight that autism spectrum disorder, while clearly a distinct clinical diagnosis, is not an indication where you cannot observe pharmacodynamic effects in healthy volunteers. Unlike oncology drugs where you can't assess efficacy in healthy volunteers, we believe that by assessing prosocial effects and social communication measures in healthy volunteers, we can observe pharmacodynamic signals that will inform dose selection and endpoint choices for patient studies. Thus, a Phase I study in healthy volunteers to gather PK/PD and mechanistic data has a reasonable likelihood of providing read-through for design of subsequent studies in ASD.

So do you believe that you might be able to—based on the results from Basel—that you might be able to go into a trial in autism patients with an IND in the U.S.?

Certainly, at some stage. Some of that will depend on regulatory discussions with authorities in the countries where we might conduct our Phase I study. Sometimes it's possible to conduct Phase I studies directly in patient populations, but that's not a pathway we have definitively guided to. We're looking to generate early signs of efficacy across indications as quickly as possible. The ability to get Phase I PK/PD data in healthy volunteers at two different doses should be quite informative for designing our Phase I program in the patient population and, as you mentioned, for transitioning to a Phase II study in ASD.

And our next question comes from Patrick Trucchio from H.C. Wainwright.

Just a couple of follow-up questions on the MM-120 program. First, I'm wondering if you can discuss some of the similarities and differences between the recently published Phase II placebo-controlled investigator-initiated trial with LSD in anxiety as compared to MindMed's sponsored Phase IIb trial with MM-120 for treatment of generalized anxiety disorder? And how much of a read-through should we expect from this investigator-initiated study to the Phase IIb trial?

Absolutely. Thanks, Patrick. I'll ask Dan to comment on any clinical nuance, but from a high-level perspective, it's important to recognize that the aggregate of clinical information—historical and modern—is particularly important here. Over roughly 80 years of research on LSD, we've seen consistent responses in anxiety and depression across many studies. Modern, high-quality, well-conducted investigator-initiated studies like the one at UHB confirm those historical effects and increase confidence. One key difference between the investigator-initiated study and our Phase IIb is the endpoint used. In the UHB study, they used the State-Trait Anxiety Inventory, which from the literature is relevant for demonstrating reductions in anxiety symptoms, but it is not a regulatory endpoint that would serve as the basis of an approval filing. We've had productive discussions with the FDA about where LSD and MM-120 fit in the overall development and evidence space. The FDA expects the use of specific anxiety scales that have been used historically for anxiolytics, and that's the scale we are using in our Phase IIb study. So while investigator-initiated studies give us great clinical comfort and optimism about the likelihood of success, the nuance lies in meeting regulatory endpoints and requirements. From a design and statistical standpoint, our Phase IIb is an efficient trial that allows us to assess dose response across multiple arms in patients, and we are testing dose levels including the high dose that mirrors the dose used in the UHB study. The Phase IIb is designed to provide evidence that is aligned with regulatory expectations and to be leveraged into a pivotal program. We believe the evidence generated here would give us a strong data set and a clear pathway to discuss the pivotal program with FDA.

That's really helpful. As a point of clarification: the decision to move ahead with the Phase IIb study instead of moving directly into a Phase III pivotal program—can you talk about how those discussions with the FDA have been ongoing and why the program wouldn't have been able to progress directly to a Phase III pivotal following that investigator-initiated trial?

Yes. Many of the points I just mentioned feed into this. We've had very productive regulatory engagements and substantial regulatory expertise informing our plan. From our first pre-IND engagement with FDA, our approach has been to plan for a comprehensive R&D program. The FDA has provided clarity that, while they have allowed some programs to go straight into Phase II without additional early work, they expect a comprehensive data package at the time of NDA submission. It is generally unrealistic for a program's first clinical trial to serve as one of the pivotal studies for broad marketing approval. For example, some of our peers have proceeded through Phase IIb and then into two pivotal Phase III trials. We anticipate conducting a comprehensive pivotal program; the exact details—such as geography, number of patients and sequencing—will be refined based on the Phase IIb results and ongoing regulatory discussions. We also want to ensure we generate adequate safety data and evidence on durability of effect, retreatment strategies and long-term outcomes, which are important considerations for a broad population and for regulatory approval.

That makes sense. I had a follow-up on COMP360—it's a different drug and mechanism, but curious what read-through there has been from their discussions now that their pivotal program is getting underway. Also, in terms of the number of patients needed to build up a substantial safety database, any thoughts on how the FDA is thinking about pivotal programs with classic psychedelics and read-through from COMP360?

Yes, another great question. Regulatory precedent matters in our field because FDA exercises discretion in assessing the adequacy of a package and ultimately in approving applications. Psychiatry has attempted to balance enabling research progress while requiring robust data. Since joining MindMed in early 2021, our strategy has been to plan for a comprehensive R&D program to build credibility with regulators and stakeholders. We anticipate conducting two pivotal clinical trials of MM-120 in generalized anxiety disorder. While we pay close attention to peer programs like COMP360, we also assess differences in mechanism, population, endpoints and geographic strategies. Those differences can affect patient numbers and trial design. We have had productive discussions with regulators, which have clarified expectations for Phase III. We'll firm up specifics as we complete Phase IIb and conduct further regulatory negotiations. We also plan to examine long-term effects and retreatment strategies; these agents are unlikely to be curative for all patients, so post-approval or additional trials may be required to address maintenance and retreatment.

Our next question comes from Sepehr Manochehry from Eight Capital.

I noticed you mentioned some of the studies ongoing on the digital medicine side of things. I want to get your thoughts on how that will wrap into whether it's ahead of your Phase III program or is that something that's going to basically be in the package to then submit for potential REMS? Just trying to understand when that data and those studies add value to the programs and how you think about the readouts there.

Yes. It's important to emphasize there are two discrete regulatory pathways: drugs are regulated by CDER (or the applicable drug review division) and medical devices/software by CDRH. For our digital MSMS products, we're engaged with CDRH, and for our drug candidates we're engaged with the relevant drug review division at FDA. We've had productive joint interactions that inform our overall development strategy both for the digital products independently and for how they could be integrated with our drug products, particularly MM-120. We haven't reached a point in discussions where we can provide precise details about co-labeling or joint approval timing. However, we are making rapid progress on the device side and intend to integrate digital tools with drug delivery in the long term. That integration could be achieved through co-labeling, separate labeling with recommended use together, or a sequenced approach. Our digital products aim to address gaps in delivery of these therapies, including high labor intensity, scalability and the logistics of multi-hour therapeutic sessions. We believe adding tools that can make observation and delivery more efficient and personalized will meaningfully enhance uptake and scalability for this drug class.

Got it. So that's top of mind in terms of pinning down the sequence. In terms of anticipated results around those, are in-use studies or beta studies something you anticipate in the coming year? Will we see some data on applications?

We certainly anticipate making announcements as we progress the MSMS platform programs. We haven't given precise quarterly guidance on timing for those data, but we expect to have more to announce in the near term with clarity about scope and how the data dovetails with our product candidates. These studies will clarify how our digital assets leverage current approved psychiatric therapies and their observation requirements, and how MSMS could support MM-120 delivery in the future.

I look forward to that. On MM-120, I know you've talked about wraparound assets like digital health. I want to ask about a trip stopper—a receptor antagonist that could abruptly terminate psychedelic effects. Catanzaro did an investigator-initiated trial in the past that was completed. Is that something that could be paired with the delivery you envision, for REMS or as useful filing data down the line? How should we think about that relative to MM-120?

At this point, we don't have an intent to co-develop or co-label a receptor antagonist as a companion product, and such a product is not approved in the U.S. The idea of an antagonist to abruptly terminate perceptual effects is mechanistically interesting and worthy of research, but to have it as a co-labeled product for that use would require clinical development and regulatory approval for that indication. It's something we could explore in the future as more data become available, but it's not an active product development program for us today.

Okay. Well, thanks for the insight there and congrats on the continued development progress. Appreciate the level of detail.

This concludes the question-and-answer portion of the call. I'll now turn the call back over to MindMed's CEO, Robert Barrow, for closing remarks. Rob?

Yes, thank you, operator, and really thank you everyone who joined us today and to all for the great questions. I'd also like to thank our entire team; we have a highly talented and dedicated team here at MindMed, and we're very grateful for their incredible efforts to advance our research and development programs. We thank our investors and all the people who have been supportive of MindMed along the way and continue to be supportive of our strategy to provide meaningful impact in the development of novel treatments for brain health disorders. I also want to thank the investigators and participants and their families. We're doing research in populations that have significant unmet need, and we believe we can have a meaningful impact in these populations, and it can't be done without the dedicated researchers and the patients who volunteer their time and go through all of the extensive work in the clinical trials to conduct these studies. So a very direct thank you to all of them. We're very excited to continue our studies, and we're very excited about the path ahead. So thank you all for being here today, and we look forward to providing further updates soon.

This concludes today's conference call. Thank you for attending.