Earnings Call Transcript - DFTX Q4 2023

Operator, Operator

Good morning, and welcome to the Mind Medicine Full Year 2023 Financial Results and Corporate Update Conference Call. Currently all participants are in listen-only mode. This call is being webcast live on the Investors and Media section of MindMed's website at mindmed.co. And a recording will be available after the call. For opening remarks, I would like to introduce Rob Barrow, CEO of MindMed. Please go ahead.

Rob Barrow, CEO

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 and 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 non-occurrence 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 are made 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 positive Phase 2b 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 7th, we will be hosting a virtual investor event during which we look forward to sharing top-line 12-week data from our Phase 2b study of MM120 and GAD, as well as key opinion leader (KOL) perspectives 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 1 pharmacokinetics bridging trial to support the differentiated product profile of our MM120 oral 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 will be working closely with the FDA to finalize our Phase 3 development program for MM120 and GAD and expect to hold our End-of-Phase 2 meeting with the FDA in the first half of the year. This is intended to enable the initiation of our Phase 3 clinical program in the second half of the year. In addition, this year we anticipate sharing one-year follow-up results from a study of lysergide in anxiety disorders, which was conducted by our collaborators at University Hospital Basel. Our progress comes at a crucial time with 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 two decades alone. This growth in prevalence and focus of anxiety disorders has unfortunately not been matched by innovative treatments, with the treatment landscape remaining dominated by SRIs, 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 and GAD, we are pursuing a session-based delivery approach in which the product candidate is administered under ongoing healthcare supervision. Separately, for MM402 and 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 four-week data from our Phase 2b trial that we announced in December 2023. The trial met its primary endpoint with statistical and clinically meaningful reductions in HAM-A scores four 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 four, 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 four weeks, meaning that four 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 improvements in all of the secondary endpoints and all time points analyzed as part of the top-line analysis, which included HAM-A, CGI-S, and MADRS results through week four. 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 wholly be attributed to the standalone effect of MM120 treatment, as the study was conducted in the absence of any other therapeutic intervention. These results also build 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 2b data clearly supports dose selection for our subsequent research and it supports advancement into pivotal Phase 3 clinical trials for GAD. With the results of this trial, we achieved all of our goals of Phase 2 development for MM120. In particular, we have rigorously characterized the dose-response relationship of MM120 and GAD, achieved statistically significant and clinically meaningful results supporting its clinical activity, and demonstrated the standalone 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 in the quarters ahead. As I mentioned earlier, at our upcoming investor event on March 7th, we will be sharing top-line 12-week data from our Phase 2b study of MM120 and 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 2 meeting with FDA in the first half of 2024 to align on the scope of our Phase 3 development program for MM120 and GAD and to initiate our Phase 3 clinical program in the second half of the year. We also plan to present full data from our Phase 2b trial of MM120 and GAD at a scientific meeting in 2024, and are excited to share the breadth of findings from this rich dataset. Additionally, based on the promising data we have observed for MM120 and 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 and interpersonal emotional connection. Pre-clinical studies of R(-)-MDMA, including those we reported earlier in 2023, have shown acute prosocial and empathogenic effects, while its reduced dopaminergic activity suggests it might exhibit fewer stimulant, neurotoxic, hypothermic, 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 1 trial is intended to characterize tolerability, pharmacokinetics, and pharmacodynamics of the 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 1 pharmacokinetics and pharmacodynamic study of R/S-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, pharmacokinetics, and 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?

Schond Greenway, CFO

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 if 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 2b trial, and $2.6 million in internal personnel costs as a result of increasing 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 and development collaborations, 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 provides some closing comments.

Rob Barrow, CEO

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 2b study of MM120 and GAD at our upcoming investor event on March 7th. We're excited to be on the cusp of moving forward into Phase 3 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 the 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, Operator

Thank you. The operator provided instructions on how to ask questions. Our first question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.

Brian Abrahams, Analyst (RBC Capital Markets)

Hi there. Good morning. Thanks for taking my questions and 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, 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 four 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 3 study? Thanks.

Rob Barrow, CEO

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 four primary data in December, and we talked a lot about the backdrop of SRIs and benzodiazepines and the effect sizes we are seeing there. Each of those drugs has different dynamics where benzodiazepines can of course be used acutely and have been approved on endpoints such as a four-week endpoint. Whereas SRIs, typically because they take longer to separate from placebo, take longer to take action, I have looked at longer term endpoints. But that same sort of effect size standard, I think is something that we would set as a general expectation. If we could exceed an effect size of 0.4, that would represent an improvement over the standard of care. Of course, if we can do that after a single dose for up to three months, that would be particularly exciting for us. But certainly, what we saw at week four 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 one response to week four 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 and anxiety and depression, we've seen in many instances six to 12 months or even longer of activity. So we certainly are excited about the durability and think it will give us great insight in terms of how long those effects can last in any patient. In terms of the dropout rate, I would reserve any comments there until we get to a final presentation of the data next week on March 7th. So, we look forward to sharing that and talking through certainly the dynamics of the population and 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 to improve product performance from a stability standpoint. LSD is 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 and one of the things we're really hoping to see is, it's 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 are the mechanism of action and drive the sort of psychological changes that result in the 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 is spending in a dosing session would effectively become more efficient in our view and give us additional promise for the carry-through to Phase 3. 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 3 program. But again, we'll be excited to share all the findings from that study at the end of next week.

Brian Abrahams, Analyst (RBC Capital Markets)

Great. Thanks so much, Rob.

Rob Barrow, CEO

Thanks, Brian.

Operator, Operator

Thank you. Our next question comes from the line of Charles Duncan with Cantor. Your line is now open.

Charles Duncan, Analyst (Cantor)

Yes. Hey, good morning, Rob and team. Thanks for taking our question and congrats on the progress. Looking forward to March 7th. Appreciate the disclosure of that. Had a couple of questions with regard to Phase 3 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 2b as enrolled, how could those things change in Phase 3? And then I'll come back with another question. Thanks.

Rob Barrow, CEO

Yes, thanks so much, Charles. So in terms of Phase 3 trial design and sizing, of course, there's going to be multiple factors that play into the finalization of the study sizing and the total population we enroll in that study. From a statistical standpoint, of course, if we were to replicate and use the effects we've seen now at four weeks to size a study into a power analysis, it indicates a very small study, even smaller than we conducted in Phase 2. 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 four weeks carry through to week 12.

Charles Duncan, Analyst (Cantor)

Okay. And then my second question is for the pivotal study. I guess, I'm wondering as you look at the Phase 2b can you speak to the role of therapy or lack thereof or functional blinding in the data that you've seen and how you'll consider that for the design of the Phase 3.

Rob Barrow, CEO

Yes, that's a great question. It's certainly an important topic that has generated a lot of discussion. Functional unblinding has been a focus, but I think people have overlooked how common it is in psychiatric drug development. Entire classes of drugs, such as psychostimulants, have clear perceptual effects. SPRAVATO also produces a clear perceptual effect in a majority of patients in those studies. From a methodological standpoint, we don't see anything different that would require deviating from the long-established gold standard for designing and conducting these clinical trials. Importantly, the absence of a therapeutic intervention in addition to the drug in our Phase 2 study means that, in our view, it is closely aligned with the FDA's 2023 guidance. That alignment means we do not need to make any changes to conform with that guidance as we move into our Phase 3 program. Regarding trial delivery and functional unblinding, we expect to continue dosing the drug without any therapeutic intervention. Patients will remain under safety monitoring as they were in Phase 2, and the delivery protocol will look nearly, if not entirely, identical to our Phase 2b approach. When it comes to functional unblinding and the selection of controls, what we have seen across studies is that a nocebo effect is more often driven by therapeutic involvement in the studies, particularly those with a heavy adjunctive psychotherapeutic component. In such studies, we have observed in many cases a reduced placebo response or even a nocebo response. In our study, we saw a robust placebo response, which we believe is a result of not including any therapeutic intervention. Functional unblinding is simply a mechanism linking the expectancy biases reinforced by that therapy to a potential impact on clinical outcomes.

Charles Duncan, Analyst (Cantor)

That's helpful. Last quick question, then I'll hop back in the queue, sort of 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 possible, call it, competition? Thanks.

Rob Barrow, CEO

Yes, thanks so much, Charles. So as we conceive of 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 has Orange Book listed patents that can utilize both regulatory and legal mechanisms to protect that market. The LSD API that we are developing as an MM120 product is something that has never been approved before by FDA. And so, in our view, at a minimum we're looking at five 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 months 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 would be quite difficult to replicate, if not impossible to replicate our product. We are using Catalent, which is the only provider and manufacturer of ODTs that dissolve as rapidly as the Zydis ODTs do. And by protecting that and then sort of creating a very narrow path that someone would have to develop to try to replicate our product and we have a robust IP fortress around that pathway. So we're still very confident in the IP protection itself, but beyond that even as you mentioned 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.

Charles Duncan, Analyst (Cantor)

Thanks, Rob, for all the comments.

Operator, Operator

Thank you. Our next question comes from the line of Francois Brisebois with Oppenheimer. Your line is now open.

Francois Brisebois, Analyst (Oppenheimer)

Thanks for taking the questions and the updates here. Just in terms of the commercial side, I was wondering if we could touch on it. I think it would be helpful if you could remind us what's going on with esketamine on the SPRAVATO side and what learnings from them give you confidence in your potential commercial opportunity?

Rob Barrow, CEO

Yes, thanks so much, Frank. Anyone who's been following the neuroinnovation and interventional psychiatry area has seen the explosion of both clinics and the adoption and sales of SPRAVATO, which J&J is now guiding for between $1 billion and $5 billion of sales. It’s incredibly promising and exciting that new treatments in this session-based delivery paradigm are having such significant uptake. We look at the dynamics for delivery, reimbursement, provision of care, and the incentive structures at each level that motivate providers to adopt and deliver SPRAVATO. When we examine each of those levels, we believe our product actually stacks up favorably. In many of our interactions with payers, sites, providers, and prescribers, we come to the same conclusion: the dynamics of delivering a drug one time for one day over the course of several hours is more favorable than having patients come back up to 56 times a year to comply with SPRAVATO administration. If we’re able to show durable clinical effects out to three months or beyond, the overall time a patient spends in the clinic would be significantly reduced compared to SPRAVATO. From a reimbursement standpoint, there are also advantages because of that reduced clinic time. Patient monitoring for SPRAVATO is reimbursed and can cost in excess of $15,000 a year as a medical benefit to payers, so we could potentially offer savings to payers. There are clearly defined codes and mechanisms for prescribing interventional psychiatry drugs like SPRAVATO that would be applicable to our product, for monitoring as I mentioned, and for reimbursement of the drug. While there is certainly work to be done, as we have talked about in R&D, it’s important to emphasize that there is an existing infrastructure and delivery paradigm that is seeing overwhelming success and uptake now. Launching into a market where we can outcompete at those locations and within those dynamics is the base case. Based on the profiles of our drug so far in development, we believe there’s an even more expansive opportunity for additional locations where the drug can be administered, because, while not yet proven out in Phase 3 studies, we don’t see a physiological risk that would require physiological monitoring to date. That gives us an extraordinary opportunity and excitement around the potential to both out-compete in the locations and channels where SPRAVATO is being delivered today and to expand into other delivery locations for easier adoption in a broader set of sites.

Francois Brisebois, Analyst (Oppenheimer)

That's super helpful, Rob, thanks. And 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, four weeks is great. From the company's perspective, it's a little follow up on a previous question. Is the 12-week kind of gravy here, or is this extremely important when you have discussions with payers?

Rob Barrow, CEO

Certainly, durability and each of the components you mentioned are really the key. Remission is important; we haven't had many psychiatric drugs where a significant portion of patients enter remission quickly and remain there. If we can show that at four weeks 50%—one in two patients—are in clinical remission and no longer have anxiety symptoms, and that this persists out to 12 weeks, it would mean that for three months after a single dose, patients who presented with severe anxiety would be free of anxiety. That's a game changer for patient care. Onset is another critical factor. When we talk to KOLs and our Scientific Advisory Board (SAB), having patients come in and reliably know within 24 hours whether there is a response—as we saw in the Phase 2 study with a clinical response on the CGI-S, which was the only metric in the study able to detect such a rapid change—is very important. Rapid onset also allows providers to determine quickly whether a patient is benefiting. From a payer standpoint, that's crucial because payers want to capture value; they would be willing to pay for these kinds of drugs if we can demonstrate that value. Capturing value depends on how clearly and robustly patients respond and how durable that response is. If we see rapid onset with durable clinical benefit and a significant portion of patients remaining in remission, we believe there is a clear path to success both in clinical practice and with payers. Regarding expectations out to 12 weeks, the data we have through four weeks put us in a position to move forward into a pivotal program. Continued response and durability out to 12 weeks would further strengthen the case and the prospects for the program, but what we've seen so far is sufficient to proceed and we are making plans accordingly.

Francois Brisebois, Analyst (Oppenheimer)

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

Operator, Operator

Thank you. Our next question comes from the line of Sumant Kulkarni with Canaccord Genuity. Your line is now open.

Sumant Kulkarni, Analyst (Canaccord Genuity)

Good morning. Thanks for taking my questions. I have a two-parter on MM120 development and a financial one for Schond after that. So the two-parter 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 7th? 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?

Rob Barrow, CEO

Yes, thanks so much, Sumant. Regarding the data we'll present next week, we expect to show a similar set of outcome measures to those we presented for week four, including HAM-A, CGI-S, and MADRS. We're excited to share data on response in anxiety symptoms as well as comorbid depression symptoms. Regarding development and the eventual indication, we'll reserve final decisions as we advance planning and scoping potential additional indications in psychiatry, and we'll provide further clarity at the appropriate time. As we discussed with reimbursement, there are multiple dynamics. Approval for major depressive disorder, as we've seen with some recent SRIs that came to market labeled for MDD — programs like Sage and Biogen had a program ultimately developed in MDD — does broaden the set of patients who could be eligible on label. However, payers are likely to want to treat patients where there is value, which depends on severity and non-response to prior treatment. So we'll reserve final determination or guidance on the indication, but I am certainly considering a broad scope of depression-related indications.

Sumant Kulkarni, Analyst (Canaccord Genuity)

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

Schond Greenway, CFO

Good question, Sumant. I think that, at least from our standpoint, our historical burden 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 a plan to be able to draw those items down. So they are in part of the overall funding strategy.

Sumant Kulkarni, Analyst (Canaccord Genuity)

Got it. Thank you.

Operator, Operator

Thank you. Our next question comes from the line of Elemer Piros with Rodman & Renshaw. Your line is now open.

Elemer Piros, Analyst (Rodman & Renshaw)

Good morning, gentlemen. Can you hear me?

Rob Barrow, CEO

We can. Hi, Elemer.

Elemer Piros, Analyst (Rodman & Renshaw)

Good morning. So I'd just like to re-circle back to, and I think the question was asked by Charles, on the size of the Phase 3 trial. We clearly saw a massive signal-to-noise ratio in the Phase 2 trial, at least up to week four. 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 set of Phase 3 trials.

Rob Barrow, CEO

Yes, thanks so much, Elemer. It's a great point and question. That's why, too, when we talk about the finalization of the Phase 3 program and protocol, there are many factors that come into play, of course. Overall patient exposures, we 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 program for post-traumatic stress disorder, NDA being accepted by FDA. 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 a Phase 3 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, it kind of reserves the final commentary on exactly what the size that will be as we enter into Phase 2 discussions with FDA and ultimately arrive at a final study.

Elemer Piros, Analyst (Rodman & Renshaw)

Yes. And Rob, you alluded to this earlier that you placed 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?

Rob Barrow, CEO

Yes, it's a really important topic for differentiation. There's been a lot of discussion and the Reagan-Udall Foundation recently put on a panel that many may have attended, where we had dialogue with other industry participants and with MAPS about these matters. From a development standpoint, when approaching the FDA we limit formal engagement to the scope of our development program. Since day one we've charted a clear course to demonstrate the standalone drug effect of our product candidates. There is a discrete, though somewhat loose, definition that includes mind-altering substances such as SPRAVATO, ketamine, and MDMA, but we're talking about a distinct drug class with the serotonergic psychedelics, and MM120 in particular. Our approach will be informed by our data, our strategy, and our prior understanding and engagement with the FDA about expectations. The guidance from 2023 made clear the need to characterize the standalone effects of a drug, and that's exactly what we've done, in a way we believe is unique in the field. So we feel very confident in our approach and our ability to support it as we enter the pivotal study.

Elemer Piros, Analyst (Rodman & Renshaw)

Thank you. Thank you very much, Rob.

Operator, Operator

Thank you. And our next question comes from the line of Patrick Trucchio of H.C. Wainwright. Your line is now open.

Unidentified Analyst, Analyst (H.C. Wainwright)

Good morning, team. This is an analyst for Patrick. Understanding that depression is different from anxiety, should we anticipate a Phase 3 program designed similar to the COMP360 design in depression? And should we anticipate a true placebo being part of a program? And then I have a follow-up question.

Rob Barrow, CEO

Yes. In terms of control conditions, and of course this likely topic we'll want to align around with FDA in our Phase 2 meeting. We fundamentally believe that regardless of mechanism of action of drugs and regardless of the qualitative differences in the perceptual effects of this drug class versus, say, psychostimulants or the dissociative anesthetics like ketamine or SPRAVATO, the gold standard in research is to conduct placebo-controlled studies. Using a non-placebo 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 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 in medicine. In terms of the scope of the Phase 3 development program, we've said previously 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. And when we have our End-of-Phase 2 meeting with FDA, we do anticipate continuing patients on into open label extension study to characterize what would happen upon re-treatment and just demonstrate even further durability out to perhaps a year longer.

Unidentified Analyst, Analyst (H.C. Wainwright)

Thank you. And does the Phase 3 program start depend on the outcome from the bridging study? And if so, when you expect that data to be reported?

Rob Barrow, CEO

Yes. Phase 3 program planning is underway. We anticipate starting that in the second half of this year. Our PK bridging data for our ODT product, we will be sharing next week on March 7th. So look forward to sharing that, but right now we're continuing to focus and plan to implement, use that product as we enter our Phase 3 program.

Unidentified Analyst, Analyst (H.C. Wainwright)

Okay, great. Thank you so much.

Operator, Operator

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

Rob Barrow, CEO

Terrific. Yes, thank you, Operator, and thanks everyone again for joining us here today. We hope you all join us next week on March 7th for our investor event and look forward to sharing results at that call. Thank you so much.

Operator, Operator

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