COMPASS Pathways plc (NASDAQ:CMPS) Q4 2023 Earnings Call Transcript
COMPASS Pathways plc (NASDAQ:CMPS) Q4 2023 Earnings Call Transcript February 29, 2024
COMPASS Pathways plc misses on earnings expectations. Reported EPS is $-0.53 EPS, expectations were $-0.37. COMPASS Pathways plc isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, ladies and gentlemen, and welcome to the COMPASS Pathways Fourth Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Stephen Schultz. You may begin.
Stephen Schultz: Welcome all of you, and thank you for joining us today for our fourth quarter 2023 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; Mary-Rose Hughes, our Interim Chief Financial Officer; Teri Loxam, our incoming Chief Financial Officer and Dr. Guy Goodwin, our Chief Medical Officer. The call is being recorded and will be available on the COMPASS Pathways' Investor Relations website shortly after the conclusion and will be archived 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 annual report on Form 10-K filed with the U.S. 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.
I'll now hand the call over to Kabir Nath.
Kabir Nath: Thank you, Steve. Good day, everyone, and thank you for joining us. Let me begin by thanking Mary-Rose Hughes, our Interim Chief Financial Officer, for her tremendous support over this last quarter. And let me welcome Teri Loxam back from climbing Mount Kilimanjaro and into the CFO role starting tomorrow, March 1st. Teri brings to COMPASS deep extensive strategic experience working for publicly traded companies in the pharmaceutical and biotech sectors. Her broad experience through all stages of development is precisely the expertise and leadership that COMPASS required as we progress our Phase III program in treatment-resistant depression. Many of you already know Teri, and I hope that over the coming months rest of you will have the opportunity to meet her.
And in a moment, I'll ask her to provide a few thoughts on her new role at COMPASS. First, though, let me report that COMPASS continues to actively recruit both our Phase III COMP360 trials in treatment-resistant depression with top line data expected this year and next. While our overall Phase III clinical program completion remains on track with top line data from 006 study expected in the middle of 2025, we are experiencing some recruitment delays in the 005 trial, which extends our guidance for top line data from that trial into Q4 of this year. Importantly, this change in guidance does not impact expected timing regarding submission of our NDA filing. As we've consistently guided, we do expect that both trials will be required for NDA submission consistent with the FDA's draft guidance for the development of psychedelics published in June last year.
We will also have all necessary preclinical and clinical pharmacology studies for a complete NDA dossier. In parallel with the Phase III trial program, we continue to take the steps needed to ensure a well-developed delivery network for COMP360 if approved. This includes developing collaborations that will educate both COMPASS and settings of care on how COMP360 may fit into treatment options for appropriate patients. A key element of these research collaborations is to explore and develop multiple potential commercial delivery templates to ensure a successful rollout of COMP360 treatment subject to FDA approval in different care settings. Earlier this quarter, we announced the first two such collaborations with Greenbrook TMS and Hackensack Meridian Health, which are two very different but equally important collaboration partners.
These collaborations will explore how to improve the patient care experience and gain a better understanding of potential commercial models for the administration of COMP360 psilocybin treatments. We also expect to announce additional research collaborations this year. In December, we announced initial safety data from our open label Phase II clinical trial of a single 25 milligram dose of COMP360 in 22 people living with post-traumatic stress disorder, or PTSD. We were also pleased to see the publication of COMP360 data from an investigator-initiated study in bipolar type II in JAMA Psychiatry. In a moment, Guy will provide more information on both of these studies. While TRD is our lead indication for COMP360, we see logical expansion of its utilization into additional indications where there are significant comorbidities and overlap such as PTSD and bipolar II subjects to additional financing.
With that, let me now ask Teri to introduce herself and share a bit about why she came to companies. Teri?
Teri Loxam: Thanks, Kabir. Now that I'm back at sea level, I'm really happy to be joining you in this experience and pioneering leadership team. Similar to many, I sadly witnessed the impact of mental health issues on people close to me. So, a big draw for me to the company was seeing COMPASS fully embracing its mission with a thoughtful, innovative and data driven approach to tackling significant unmet need in this area. Psychedelics and their potential to treat mental health conditions have received significant attention in the media, but we are still very much just at the beginning of this journey. While psychedelics could be transformative to mental health, in these early days, it is critical for companies to build and execute robust clinical trial plans to realize the long-term potential.
This is precisely the approach COMPASS has taken with its large Phase II and ongoing Phase III programs in TRD. There are a lot of important milestones over the next 12 to 18 months for the company. And with a strong balance sheet and an experienced team, we are well positioned for success. I'm really looking forward to working with the team to help shape the landscape and prepare for this potential important treatment option for patients. With that, let me hand the call back to Kabir.
Kabir Nath: Many thanks, Terry. Welcome once again, and it's great to have you join our leadership team. Let me now hand the call over to Guy to update you on clinical news during the quarter. Guy?
Dr. Guy Goodwin: Thank you, Kabir. Looking at the COMP360 pivotal program, nearly all sites have been initiated for COMP005. For the 006 trial, we have sites initiated in the U.S, Canada, UK, Ireland, Sweden and Spain. I anticipate further progress this year. Patient demand is strong in all geographies, which as expected, reflects the degree of unmet need in this population. However, as Kabir has said, we are experiencing delays in recruitment in our 005 trial. As we've said before, these trials are complex. Beyond the Schedule I drug organizations and unique handling requirements and redosing protocol, we are formally confirming every patient's TRD diagnosis, an important element to the quality of this program. This has been a challenge that medical record keeping is decentralized in the U.S. and has slowed the pace of screening and enrolling.
However, now that nearly all 005 sites are open and with the addition of resources, we will see an increased pace of recruitment, which should help improve enrolment. The challenges we have encountered are specific to U.S. clinical sites and as Kabir mentioned, we don't see the same impacts to COMP006, a global trial which remains on track. Separately, we're also excited by the potential for COMP360 in other indications. PTSD is an additional indication of interest which we have investigated in an exploratory Phase II safety study of 22 patients, all of whom were administered a single dose of 25 milligram COMP360 psilocybin. We announced initial safety data in December, which demonstrated that COMP360 was well tolerated up 24 hours and the safety profile was as expected with no treatment emergent serious adverse events recorded.
The study participants have been followed for 12 weeks and we look forward to announcing the full PTS data set including efficacy later this Spring. In addition, as Kabir mentioned, the full results of an independent investigator led study in bipolar type II depression were published in JAMA Psychiatry. These data first announced in 2022 demonstrated potential for investigational COMP360 psilocybin treatment in another difficult to treat depressive disorder. The study was conducted by Scott Aaronson at Sheppard Pratt in Baltimore and funded by COMPASS. It investigated the safety and efficacy of a single 25 milligram dose of COMP360 psilocybin treatment with psychological support. The primary endpoint was change in MADRS total score from baseline to week three.
All 15 participants had lowered MADRS scores with a mean change from baseline of minus 24 points at week three. 12 participants met the criteria for response and 11 met the criteria for admission. While this is a small trial, we see the results as extremely promising. Importantly, there was no increase in the suicidality score based on MADRS and no unexpected adverse events or difficulties with the dosing sessions over the 12 weeks of the study. We did not see the onset of a manic, hypomanic or mixed state, which is a particular concern for patients with bipolar disorder. The most common adverse event was headache reported by 4 out of 15 participants on the day of dosing with symptoms resolving within 24 hours. People living with bipolar II depression like those living with TRD have limited or no option.
So, it's encouraging to see early signal that COMP360 psilocybin may have potential to help those living with these depressive conditions. As Kabir indicated, based on this study's results, bipolar type II looks to be an indication of interest for the use of COMP360 and additional larger studies are under consideration. This is a good fit with our mission for the company. Let me now hand the call to Mary-Rose for financial overview. Mary-Rose?
Mary-Rose Hughes: Thank you, Guy. I'll now step through the full year financial results. Cash used in operations in the full year 2023 was $97.4 million within the guidance range we provided for the full year last quarter of $94 million to $100 million excluding R&D tax credit. The timing of receipt of the credit is uncertain, but I'm pleased to confirm that HMRC have since approved our claim in full and we now anticipate receiving the tax credits in the first quarter of this year. For the year ended December 31, 2023, net loss was $118.5 million or $2.32 per share compared with a net loss of $91.5 million or $2.16 per share during the same period in 2022. These results include non-cash share-based compensation of $17.3 million in 2023 and $13.1 million in 2022.
R&D expenses were $87.5 million in 2023 compared with $65.1 million in the prior year and G&A expenses were $49.4 million in 2023 compared to $45.4 million in the prior year. Long term debt under our Hercules loan facility was $28.8 million at the end of the fourth quarter. Regarding first quarter financial guidance, we expect net cash used in operation to be between $17 million and $23 million which assumes that we received R&D tax credit in the first quarter. However, as I mentioned already, the timing is uncertain. Turning to full year financial guidance, we expect cash used in operations to be between $110 million and $130 million. We expect to narrow this range as the year progresses. COMPASS continues to maintain a strong financial position with cash and cash equivalents of $220.2 million at December 31, 2023 compared with $143.2 million at December 31, 2022.
We will continue to manage our cash carefully to continue advancing our pivotal programs and to achieve important milestones that we believe will create value for our shareholders. Thank you. And I'll now turn the call back to Kabir.
Kabir Nath: Thank you, Mary Rose. I'm pleased that we're seeing continued enthusiasm and meaningful momentum building for both COMPASS and its area of science. Our COMP360 Phase III program remains on track with the first trial expected to read out this year, not only a key milestone for COMPASS, but also a major event in the development of psychedelic medicines. The FDA draft guidance for clinical studies of psychedelic drugs along with the European Medicines Agency's plans to establish regulatory guidelines for the development and therapeutic use of psychedelic substances in Europe are important signs that regulators are preparing for the potential use of psychedelics as treatment. In a sign of the continuing unmet need in TRD, esketamine sold under the brand name Spravato achieved global sales of almost $700 million in 2023, which demonstrates the continued growth of interventional psychiatry and the infrastructure to deliver it, which bode well for the potential of COMP360 if approved.
We also welcome the news of FDA acceptance of Lykos therapeutics NDA submission for MDMA assisted therapy for PTSD. We're seeing increasing interest from clinicians who plan to incorporate psilocybin treatments into their mental health offerings. Our collaborations are indications of this interest, and we'll continue to develop commercial models that enable rapid, scalable, broad and equitable access to COMP360 if approved. In closing, with our strong balance sheet, we are focused on execution of our Phase III program in treatment resistant depression. This will be an exciting year for COMPASS Pathways and we look forward to updating you on our progress over the coming year. Thank you again for your participation on today's call. And we'll now turn to Q&A.
So I will hand the call back to the operator. Thanks.
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