COMPASS Pathways plc (CMPS) Q2 2021 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Welcome to the COMPASS Pathways Second Quarter 2021 Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Stephen Schultz, Senior Vice President of Investor Relations. You may begin.

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

Thank you, Steve, and welcome, everyone. This quarter, I am pleased to report that we continue to make great progress in all aspects of our business. On July 8, we announced that our lead development program of our COMP360 psilocybin therapy in treatment-resistant depression, or TRD, reached a significant milestone as the last participant completed their psilocybin session. With this milestone, the trial is now fully recruited at 233 individuals, exceeding our original goal of 216. This Phase IIb trial is the largest clinical trial of psilocybin in history, and we expect data from this trial by the end of the year. I want to remind you that the primary objective of this trial is to identify the target dose of our planned Phase III clinical trials and inform other aspects of the design. This important step in the development process is one that was a requirement prior to progressing to Phase III based on our interactions with regulators. In this study, we are comparing a 25-milligram dose and a 10-milligram dose of COMP360 psilocybin with a 1-milligram dose, given to the patient in conjunction with psychological support from specially trained therapists. The primary endpoint of the trial is a reduction in depression symptoms as measured on the MADRS scale at 3 weeks. We will be also looking at the durability of response at numerous points up to 12 weeks as well as safety and tolerability. We believe that our COMP360 psilocybin therapy has the potential to provide a rapid and sustained treatment effect with a well-tolerated safety profile. Once we have the data, in addition to those arising from our extensive preclinical studies, we plan to meet regulators in an end of Phase II meeting. The information we obtained from this trial will inform the design of our Phase III pivotal program, which we expect to begin as quickly as possible. In addition to our TRD study, we continue to invest in the expansion of our portfolio through new indications and new compounds. We supply COMP360 free of charge to investigator-initiated studies exploring a range of indications in areas of unmet mental health need, including anorexia nervosa, bipolar disorder II and severe TRD. Any positive signals from these small studies would offer COMPASS the option to elevate the research into large late-stage clinical programs. A number of these studies are currently underway. One, in particular, is being performed by the Aquilino Cancer Center in Maryland, United States, where they are finishing a small open-label study of COMP360 psilocybin therapy in cancer patients. We expect data from this study later this year. We also plan to begin a number of new studies and new indications over the next few months. We continue to be active in preclinical research, exploring new psychedelic compounds. These studies are being done through the COMPASS Discovery Center, a network of leading scientists from the University of Sciences, Philadelphia; UC San Diego School of Medicine; and the Medical College of Wisconsin. This early-stage work should enable us to broaden our portfolio beyond COMP360 psilocybin therapy. In the U.K., we are developing a research partnership with a couple of leading institutions, South London and Maudsley NHS Foundation Trust and the Institute of Psychiatry, Psychology and Neuroscience at King's College London. We have signed a memorandum of understanding, setting out our joint intent to work together to accelerate psychedelic research and develop new models of mental health care in the U.K., particularly in areas of unmet needs such as depression, PTSD and anorexia nervosa. We are facing an urgent global crisis in mental health care, made worse by the COVID pandemic, and need to work collaboratively to address this. COMPASS was honored to be part of a working group that help to establish mental health as 1 of the 7 critical missions in the U.K. government's life science strategy announced last month. Also, in the U.K., we are proud to be a founding supporter of the British Neuroscience Association's inaugural scholars program, which launched earlier this year and aims to support students from underrepresented ethnic groups to thrive in neuroscience. This fits well with our ongoing commitment to fostering and maintaining a bold culture of equity, diversity and inclusion within our company and in the wider neuroscience and health care communities. Our COMPASS team continues to grow in all areas in support of our goal to transform the patient experience in mental health care. We have made important leadership hires in clinical science, regulatory affairs, clinical safety, quality and CMC as we develop new compounds, additional indications, and prepare for our Phase III program. Notably, we announced 2 senior team members: Guy Goodwin, our new Chief Medical Officer; and Danielle Schlosser, our Senior Vice President of Clinical Innovation. Professor Guy Goodwin is a Maritas Professor of Psychiatry at the University of Oxford. He is a deeply experienced psychiatrist and an outstanding leader in the field who is wholly committed to patient care. He's been working with us in an advisory capacity since the beginning of the Phase IIb trial, and we're delighted to welcome him in a more active and full-time role. Dr. Danielle Schlosser joined us from Verily Life Sciences, a sister company to Google, where she was behavioral health lead, overseeing the launch of several products, including digital measurement capabilities and clinical care initiatives. Danielle is now leading our therapy research and training team. Her clinical and digital innovation experience will accelerate our work as we move towards Phase III and adds to the tremendous strength we are building in our digital team. Our work is in developing new models of care with psychodelic therapies, but our focus is firmly on mental health and transforming mental health care for patients. As we lead in the science, so much we lead in trying to eliminate the stigma associated with mental health illness. With this in mind, we recently launched a podcast called Everyone has a story: talking about mental health. The podcast features guests who talk about their mental health journeys and discuss critical issues in mental health care, to open up a dialogue about mental health challenges and inspire others to do the same. The first 2 episodes are available through the COMPASS website or any podcast app. Do listen and tell us what you think. Finally, a word on patents. We continue to build a strong IP portfolio with 8 granted patents now in the U.S., the U.K., Germany and Hong Kong. We recently received a nonbinding opinion from the U.K. IP office, questioning aspects of some of the claims in one of our granted U.K. patents. The opinion came in response to a request for opinion from a third party, and it's just that, a nonbinding opinion. The opinion does not invalidate our patent or any of its claims, and we remain confident in the strength and defensibility of our patents. With that, I will now hand over to Piers, who will give you an update of our financial results for the quarter.

Thank you, George. The company continues to maintain a strong financial position with cash and cash equivalents of $316.3 million at June 30, 2021, compared with $190.3 million at December 31, 2020. This includes the proceeds from our recent additional raise of $165.6 million before underwriter fees and expenses, which included the full exercise of the underwriting adoption to purchase additional ADSs or green shoe. This is expected to fund operations into 2024. I will now recap our financial results for the 3 and 6 months ended June 30, 2021. The loss from operations for the 3 months ended June 30, 2021, amounted to $19.5 million compared with $17.7 million for the prior year period. The loss from operations includes noncash share-based compensation expense of $1.9 million for the 3 months ended June 30, 2021, compared with $9.7 million noncash share-based compensation in the prior period. Research and development expenses for the second quarter of 2021 amounted to $11.4 million, an increase of $4.6 million compared with the second quarter of 2020. This increase in research and development expenses compared with the prior year period was primarily attributable to: first, an increase of $4.7 million in development expenses, which is principally related to an increase of $3.8 million in clinical trial expenses and an increase of $0.6 million in preclinical studies supporting our investigational COMP360 psilocybin therapy development. Secondly, an increase of $1.4 million in personnel expenses, mainly in digital and clinical activities. Thirdly, a decrease of $1.7 million in noncash share-based compensation. And fourthly, an increase of $0.2 million in other expenses, which was primarily related to increases in consulting and regulatory compliance expenses. General and administrative expenses were $8.2 million in the second quarter of 2021 compared with $11 million for the same period in 2020. The decrease of $2.8 million in general and administrative expenses compared to the prior year period is primarily attributable to: firstly, an increase of $1.9 million in personnel costs, primarily additional personnel in general administrative and commercial functions to support our growth initiatives, including our transition to a public company. Secondly, a decrease of $6.1 million in noncash share-based compensation. Thirdly, a decrease of $0.5 million in legal and professional fees, primarily related to expenses associated with operating as a public company. And fourthly, an increase of $2 million in facilities and other expenses, including rent, depreciation and insurance. Other income for the second quarter of 2021 amounted to $2 million compared with other income of $1.5 million for the corresponding period in 2020. Increase in other income amounting to $0.5 million compared with the prior year was primarily attributable to: firstly, a net movement of minus $1.6 million in foreign exchange arising from a loss on foreign exchange of $0.6 million in the second quarter of 2021 compared with a gain on foreign exchange of $1 million in the second quarter of 2020. Secondly, a net movement of plus $0.7 million on the fair value of convertible notes, reflecting an amount of $0 in the second quarter of 2021 compared with a loss of $0.7 million in the corresponding period of 2020. And thirdly, an increase of $1.4 million in other income and expenses, which was primarily related to an increase in the income from R&D tax credits, which rose to $2.6 million in the second quarter of 2021 compared with $1 million in the second quarter of 2020. The net loss was $17.5 million or $0.44 loss per share for the 3 months ended June 30, 2021, compared with a net loss of $16.2 million or $1.65 loss per share during the same period in 2020. The loss from operations for the 6 months ended June 30, 2021, amounted to $33.1 million compared with $26.4 million for the prior year period. The loss from operations included noncash share-based compensation expense of $3.6 million for the 6 months ended June 30, 2021, compared with $11.4 million of noncash share-based compensation in the prior period. The net loss was $30.2 million or $0.79 loss per share for the 6 months ended June 30, 2021, compared with a net loss of $24.8 million or $2.61 loss per share during the corresponding period in 2020. And with that, I hand you back to George. Thank you.

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

[Operator Instructions] Our first question comes from the line of Charles Duncan from Cantor Fitzgerald.

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

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

Yes. Good. That makes sense to me. It is a Phase IIb, not a pivotal program. But regarding that pivotal program, I guess, I'm going to push a fast-forward button here and ask you to speculate on the future and that is regarding -- given the unmet need in TRD, in fact, that this is a pretty large Phase IIb, could you imagine having to conduct only 1 Phase III study? Or are you planning -- do you believe it's prudent to plan on 2 Phase III studies?

Well, I think you're spot on in terms of -- this is a different type of program. And so whilst I think there might be a series of results coming out of our Phase II that could lead us to treat this Phase IIb as a pivotal and then have one additional pivotal, I'm not sure it's prudent from a patient perspective, where we really do need to make sure that we have enough trained therapists. We understand how to deliver this at scale. And all of that would be really teed up by a fairly expensive Phase III program. So I think we're well funded for that program. And I think that this is really kind of our focus is to do the science, understand who responds and also to prepare the commercial environment. So again, we can't foresee the future in terms of the results of the study. However, I think our goal is to proceed as quickly as possible into Phase III and to have that program be a really good important stepping stone to patient availability, again assuming the data work, we bet.

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

Yes. So thanks, Charles. We don't guide to projected expenditure. And in particular, one of the things -- it's obviously going to be quite volatile as we complete the Phase IIb by the end of this year and then going to see a significant ramp up, assuming that the end of Phase II can go as well with FDA and we start on Phase III in 2022. Obviously, also, we're looking to start, as we've said, our sponsored studies in a couple of other indications in Phase IIa studies in the 3 months. So I think the -- that there will continue to be some volatility in our R&D quarterly expenditure.

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

Just actually a follow-up on some of Charles' questions. George, can you talk us through the powering and the statistical plan as it stands right now for the primary analysis, especially between the 2 doses? Like is it 25 milligrams versus 1 milligram and 10 milligrams versus 1 milligram? Or is it sort of pooled 25 milligrams plus 10 milligrams activity versus 1 milligram? And then as has been the case for other trials in novel antidepressants, there's a lot of focus on your 12-week efficacy endpoint. Can you help us frame how we should be looking at the efficacy at 12 weeks or earlier because you mentioned multiple time points that 12-week time point versus the primary 3-week primary endpoint?

Sure. So again, this -- the statistical -- I should just note that the way we developed this protocol is it includes collaboration with the people who developed the STAR*D, which is the largest TRD trial. So those were the team that we brought together to help us create this and review the protocol with regulators on both sides of the Atlantic and have had a single protocol against -- across 10 countries and 22 sites. As part of that, we did choose to have us look at 25 milligrams, then to look at 10 milligrams versus 1 milligram. So it is a progressive hierarchical assessment. And we're very heartened by the New England Journal data coming out, a different population, but again, MDD population, where we saw when 1 milligram was given in conjunction with the dosing of a leading antidepressant, we still saw separation between 25 milligrams and 1 milligram. So we're quite excited about the possibility that we see in this design if we're looking at 25 milligrams versus 1 milligram and 10 milligrams versus 1 milligram. Remember, the purpose here is to look at first, the most safe and tolerable dose, which leads to the greatest impact on MADRS. And then also to look at durability. To your point on the 12 weeks, remember, this is a single dose. And what we're really looking at is what is the durability. We've seen a fair amount of variability in the smaller studies. So what we're really trying to do is to understand durability for whom. And that's why we're looking at -- in discussion with regulators, we agreed to look at 1 week, 2 week, 3 week, 6 week, 9 week and 12 week with our secondary coming in at 12, and looking at the durability of the response. I hope that answers the question.

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

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

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

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

Sure. So with regard to the first question, I think that what drives us again is this focus on unmet need. And we're going to actually be progressing wherever we see that as a possibility. And so that's what's been driving the focus. I think because you did a 2-part question, I'd like you to go back and make sure I've answered the first part, Josh?

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

Got it. Thank you. Yes. So -- thank you. So I think our whole focus, right, is because of the level of unmet need, what drove us from the very beginning is to make sure that we can get something to patients that will help. And we have indication that psilocybin can help these patients. Whether there's a more optimized approach downstream, that's a different question. But right now, we'll be exploring COMP360 because it will allow us to have the fastest access for patients. And if we can improve the lives of patients, that's what we're here to do. So starting with COMP360, and then obviously, we have other things in development that we've shared coming out of our discovery center with different characteristics. But right now, COMP360 is the one. In terms of capacity building, it's very straightforward. As I commented on our Phase III program, our goal is to be building out capacity through an expanded Phase III program as well as through exploring other indications. So that helps us build therapies. It helps us build capability. And as we share more about our Phase III infrastructure after our Phase II -- end of Phase II meeting, I think that will become clear, but it's very much a focus of ours to make sure we have capacity. And so we don't end up having promising results, but then insufficient capacity to actually improve the lives of patients. Thank you.

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

So first question is just around -- I'm just curious if you can talk a little bit about how you're ensuring kind of that patients are coming in for their follow-up visits to kind of ensure that we have a robust data set at that 12-week time point? And anything you can share as well on kind of how dropouts or patients who are lost to follow up may be handled in the analysis? And then my second question is just around some of the kind of discovery and formulation work that you're doing. If you could talk a little bit about some of the key characteristics that you are looking for in some of these next-generation molecules in terms of kind of onset of action, durability of the psychodelic experience, intensity of the experience, et cetera, that would be great.

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

And on your -- yes, absolutely. On your third question on our discovery work. So as we mentioned, indeed, we are developing novel psychedelic and psychedelic-like compounds, and we're having several goals with that. I think the overarching goal is actually to answer a scientific question. As you know, there's a lot of enthusiasm in the field, but we need to caution everyone that we do not know how short an experience can be while still maintaining durable antidepressant effects. Because all the work over the past 20 years and a lot of the work in the 1950s, '60s, '70s and '80s have been done with long-duration psychodelic compounds such as psilocybin, LSD and mescaline, of which psilocybin is the shortest. So we don't know if significantly reduced experience might convey the same patient benefits. Therefore, we're creating different novel molecules that will have different durations from, I think, at the lowest end for potentially half an hour for an entire experience, all the way up to 4 hours. And then eventually, we need to run mechanistic trials in the form of Phase 0 trials to see if we can pick up typical signatures in terms of physiology changes in human subjects that let us infer antidepressant and anxiolytic benefits in patients. In terms of other properties we're looking at, the core target for us is the 5-HT2A receptor. To some extent, the 1A receptor. There are other receptors that modulate the experience and work in tandem in the serotonin system such as, for example, the 2C receptor that's based on agonism properties of molecules can cause slight anxiety changes. So one might want to modulate activity at that receptor depending on the indication being treated. And then there's also the risk of 5-HT2B binding. There's a lot of, I would say, enthusiasm on the idea of microdosing and running clinical trials with microdosing. I think we need to caution everyone to do that. LSD is most widely used for that purpose. LSD binds quite strongly to the 5-HT2B receptor, and it's well understood that drugs like fenfluramine that bind to the 2B receptor at chronic dosing can lead to cardiovascular problems in terms of heart valve thickening, which can eventually lead to a heart attack. Therefore, if one wanted to explore a chronic dosing regime, one would need to, for example, improve 2A agonism over 2B agonism. And these are some of the elements where we're exploring. And then the goal is to move them very quickly through the toxicology studies and basic preclinical screening and then do a lot of the mechanistic work in humans because, obviously, the experience matters. I mean that's the last thing I'm going to say. Some of these very short-acting tryptamine-like compounds needs a full dissociation, where the patient doesn't have the ability to actually process deep-rooted psychological issues as happens with psilocybin. We believe that in itself has a strong therapeutic character that's worthwhile exploring and researching. And therefore, we try to preserve some of these elements that the patient actually has sufficient time and the experience to work through personal problems. We believe that actually this very strong dissociation might be traumatizing to patients. Overall, the goal is to be in the clinic with the first 3 to 5 molecules within the next 18 to 24 months, and then follow on with molecules in the years thereafter.

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

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

We have been very focused -- Esther, thank you. I think that, at this point, we have very clearly focused all of our PIs on the recruiting of patients with depression, and treatment-resistant depression is validated through medical records. Quite often, there is comorbid anxiety in terms of -- and we are using the HAM-A in assessing any impact on comorbid anxiety. We've seen that in other studies that it has been significantly improved, that not only suppression improved in active dose but also anxiety. And again, over 70% of patients have this comorbidity. In terms of looking at other things such as social anxiety, we haven't called that out specifically. But we will have the largest data set ever created in this area. We'll be interrogating it very carefully to learn what we can about the patients who will benefit most and also to inform our future program.

Yes. Seems like there could be a lot from this data set. And then just a follow-up separately. It's just -- so on the -- regarding the patent challenge in the U.K., I was wondering if you could provide any additional details?

So the patent challenge was made to our -- comes from the same group who initiated the post-grant review of our first U.S. patent, and that challenge was dismissed on the merits in August 2020. This new challenge to one of the U.K. patents appears to repeat many of those arguments. And that was on prior unsuccessful challenges. And they are cited and the request has been considered by the U.S. patent office, and it's not found to be a barrier of patentability. So this particular challenge, again, was on the U.K. patent. It's a nonbinding opinion from the U.K. intellectual property office questioning aspects of some of the claims in one of our U.K. patents. The opinion came in response to this request for opinion from a third party, and it's just that a nonbinding opinion, and it doesn't invalidate our patent or any of its claims. And we remain confident, I think, that this is just part of this environment. And so we remain confident in the strength and defensibility of our patents, and interestingly enough, while challenging some aspect in this opinion that also supported others.

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

Yes, it is.

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

Just a couple of follow-up questions. I guess the first one is just that -- it appears that MDMA is on track for approval in PTSD in 2023. And with the understanding of the differences in mechanism, delivery and indication, I'm wondering what learnings, if any, have emerged from the MDMA Phase III program that COMPASS could apply to its potential Phase III TRD program? Or to other potential clinical trials in a COMP360 program?

Yes. At this point, we are -- go ahead, Lars, why don't you take that one?

Yes. And I just want to say, Patrick, we're really happy with the development. Maybe on a macro level, it's another great achievement in mental health, right? We see the rollout of racemic ketamine clinic providers. We saw the approvals of Spravato in treatment-resistant depression and suicidal ideation. And now MDMA moving closer to approval with a phenomenal Phase III results in chronic PTSD. I think what is outstanding is that the remission rates in the study were north of 60% with a p-value of 1 in 10,000. And that shows you what the potential of psychedelic therapies might be. I think -- what did we learn from it? I think one of the things that we are absolutely aware of is incorporating payer requests into our study designs. And as you know, one of our core objectives is to make psilocybin therapy accessible to as many patients in need as possible that requires full reimbursement. As you know, we've worked with payer systems both in Europe and North America since the early days of the company in order to make sure we're not only developing the data required for safety, efficacies and approval, but also for commercialization. I think that is something that we're learning from MDMA, where you see that in these studies, it's a very therapy heavy approach. We focused on the core elements for efficacy in our study. I think what we also achieved and learned is that we are able to reduce the number of therapists required. We reduced the amount of therapists from 2 therapists per patient to 1 therapist per patient. We believe that is a scalable model. We're also looking at the merits of eventually simultaneous group administration. And we have delivered great safety data in the Phase I for up to 6 participants. At the same time, we're now involved in a study with patients under our IND in major depressive disorder in the United States and patients with a cancer diagnosis. Again, they were treating -- we're running in groups of 4 patients through preparation, the actual dosing day, and then the integration session in groups of 4, that seems to be going really well. And so we're absolutely learning from that. I think when you look at the numbers required for this astonishing Phase III results, they only had 80 patients in that study. The second Phase III has a similar patient number. Obviously, we are running a very large Phase IIb study. And I think we're going to learn a lot from the data set and the analysis, too, and then decide of how large our Phase III actually has to be. I hope this answers your question.

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

Sure. I think that our whole focus here is on world-class talent, and that continues. So we have our new Head of Safety -- Clinical Safety comes with a background from the FDA, psychiatrists, et cetera. Very, very strong background in drug development. Our Head of Quality, again, someone who's been leading in terms of how to design quality into the functioning of the entire organization. So we have hired all of these people at VP level or above. And I think this is really about how do we strengthen the ability to execute rapidly as we go into our studies. When we look at Guy and Danielle, I think that Guy Goodwin coming in as our CMO speaks to our focus on academic rigor and the ability to have someone deeply, deeply respected in the area of depression, bipolar, et cetera, former Chairman of Oxford to come in and work with us. I think it's critically important. Danielle brings kind of the whole focus of Verily and Google to us and how we think about therapy development. Remember, we're pulling all of these pieces together, the digital, the medicinal and the therapeutic. And we need world-class talent to do that in every area, which we're focused on. So really looking at how do we define these new clinical care pathways for patients who are not served by existing ones, that's what the team is focused on. So I think, hopefully, that will give you a little bit more detail, and we'll be sharing a little bit more on everyone else's background, but we're now over 100 people, and it's been as full-time employees. And I think it's been really gratifying to see the team build. There really is no one like us in terms of that capability and the breadth of it.

Yes. And then just one quick follow-up on just COMP360 and TRD. I'm just wondering how soon after the Phase IIb top line data could you -- or would you expect the end of Phase II meeting? And what from your perspective would be the ideal outcome from that meeting?

We've been reviewing our Phase III program with regulators based on different scenarios for over a year now. And -- so our goal in the Phase III is to bring all of the data to bear not only the Phase II meeting but all the safety data, all the additional studies we've done and bring it to bear to the FDA. As you've gotten to know us, we're all about execution. So our goal is to do that as quickly as possible, but not faster. So we are well prepared for that. And our goal is to minimize like any patient-oriented company at the time between the end of Phase II and the start of our Phase III. We've also worked with a CRO, and we're developing our infrastructure for Phase III again. So following the meeting with the FDA, which we'd expect to be early next year, certainly, in the first quarter, that's where we're going to go and build upon to get to Phase III as quickly as possible. Again, it's all about the data. These dates may change depending on what we learn in the data. That's why we're doing the study. That's why we're an evidence-based company.

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

Congratulations on the progress. Look forward to the IIb data upcoming. Just with regard to the additional indications that you were mentioning, anorexia, PTSD and others down the road, do you envision patients being managed similarly to TRD in that -- with regard to the preparation, the administration with therapist support and then the integration afterwards? You spoke to it a little bit earlier, but can there be potentially group integration sessions? Or just any changes as you -- any potential changes as you might consider additional indications? And then one follow-up with regard to the patent. Would this discussion that you're having, this nonbinding opinion, have any effect on the pending applications?

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

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

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

Yes, absolutely. Bert, I hope you understand that we do not comment on ongoing patent prosecution in detail. Of course, we are very confident in our strategy. We have 4 patent grants still pending. We don't expect any major impact from the current nonbinding challenge.

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

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

So just very clearly, we plan to work closely with delivery partners. We do not want to be a -- given our mission, we certainly don't want to be a bottleneck to any kind of deployment. Hence, we want to have a vigorous group of partners to deliver the care. Our goal is to work with those partners so that we can actually make the care better through our understanding of how that's progressing and our ongoing data. I think that the -- so that's critical to our strategy. It's to be working with a vibrant group partners. And I think this points to the need for a broad ecosystem, whether it's for MDMA, whether it is for ketamine, other administered care models in this new paradigm of clinical care for psychiatry. So we expect to work vigorously and effectively with a whole group of partners. And in terms of our future commercial plans, we cannot comment on that beyond making sure that we're never a bottleneck.

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

I was wondering if you could spend just a couple of minutes on the cancer study, the investigator-initiated trial. What sort of benchmark would you have to see, George, for you to invest in the program? And part B to this question is, have you explored the regulatory framework? What sort of end points may be usable here? And what sort of duration of treatment or observation would you have to have for -- from the regulatory perspective?

Yes. So obviously, we're very focused on working with regulators about how to think about these new areas. Obviously, these patients are suffering with MDD, often with comorbid anxiety as we hear. And in many ways, these are patients who are very difficult to treat, right, given their other physical issues. So I think our goal in this was to see if, in fact, we could make a durable impact in a study with a different delivery model. And this is the first patient study that actually did simultaneous preparation, administration of psilocybin therapy among 4 people in separate rooms, but simultaneously, and integration. So this is a pretty different delivery model that is actually not terribly distinct from models in other forms of cancer care and support groups. We will be seeing those data later. And I think what we are looking for is movement in all of the traditional measures. Again, we have a MADRS measure here. There's a 3-week and an 8-week endpoint. And we're going to also be looking at the qualitative changes in patient experience and that will help inform an ongoing program following a set of discussions with regulators based on the data. Again, sorry to be boring, but we're all about evidence. And I think there have been interesting small studies at this point. What we want to do is to start the conversation about bringing this model to patients at scale. And that study is first step in doing so, working closely with the Maryland Oncology/Hematology group at Aquilino Cancer Center.

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

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

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