Thank you for standing by. My name is Louella [ph] and I will be your conference operator today. At this time, I would like to welcome everyone to the COMPASS Pathways' Third Quarter 2024 Investor Call. [Operator Instructions] Thank you. I would now like to turn the call over to Steve Schultz, Senior Vice President of Investor Relations. Please go ahead.

Welcome all of you and thank you for joining us today for our third quarter 2024 results conference call. Again, my name is Steve Schultz, Senior Vice President of Investor Relations at COMPASS Pathways. And today, I'm joined by Kabir Nath, our Chief Executive Officer; Lori Englebert, our Chief Commercial Officer; and Teri Loxam, our Chief Financial Officer, who will be giving prepared remarks as well as Dr. Guy Goodwin, our Chief Medical Officer; and Dr. Michael Gold, our Chief R&D Officer, who will join us for Q&A. The call is being recorded and will be available on the COMPASS Pathways' Investor Relations website shortly after the conclusion of the call and will be available for a period of 30 days. Before we begin, let me remind everyone that during the call today, the team will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. You should not place undue reliance on these forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those risks and uncertainties described under the heading Risk Factors in our most recent quarterly report on Form 10-Q filed with the 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 statement even if our estimates or assumptions change. I'll now hand the call over to Kabir Nath.

Thank you, Steve. Good day, everyone and thank you for joining us. Let me begin by welcoming Lori to her first quarterly call with COMPASS. As I said on our August call, we're pleased to have such an exceptional leader join the company and round out our executive team. Lori brings deep strategic and commercial experience, having most recently launched AUVELITY at Axsome. That experience will be valuable as we prepare for the commercialization of COMP360 and we're thrilled that she has joined us. In a moment, I'll ask Lori to update you on the commercial landscape and our commercial preparation which we know are areas of major interest and focus for our investors. And as usual, Teri will provide you with a financial update. First, though, I want to address questions around the anticipated disclosure of our pivotal COMP360 trials. On our August earnings call, we pushed the anticipated 6-week disclosure date for the COMP005 trial back to the end of this year or early next year. Based on our recruitment to date, it now looks unlikely that we will be able to disclose the 6-week data in the first quarter and we're therefore updating our guidance for the 6-week 005 data to the second quarter of 2025 to give us more assurance. Our top priority is completing our Phase III trials and we're doing everything we can to ensure that sites recruit as quickly as possible while maintaining the integrity and quality of the trial. Mike Gold, who came onboard in May has significant drug development experience in neuroscience and is spending much of his time on the ground with the sites which has given us new insights into some of the challenges and helped us to refine our plans. We're the first company to conduct such large…

Thank you, Kabir. Let me begin by saying what a privilege it is to be part of the COMPASS Pathways' team. Our focus on advancing treatment options for patients with difficult-to-treat mental health conditions, especially for patients with treatment-resistant depression, or TRD, is an area I have a personal connection to and I am extremely passionate about helping deliver potential solutions for patients and their providers. By definition, treatment-resistant depression is an area of extremely high unmet need. About 1/3 of patients treated for major depressive disorder fail to achieve remission after 2 therapies and are therefore, considered treatment resistant. Innovation and commitment to develop safe and effective products in this patient population has been limited. And currently, there are only 2 FDA-approved pharmacologic treatments with a TRD indication. If approved, COMP360 has the potential to change the way patients who are suffering from treatment-resistant depression are managed. And given the high unmet need in this patient population, we see significant commercial opportunity. As I have been diving-in at COMPASS, I have been impressed by many facets of the commercial work that are already underway, all-important steps forward in preparing for launch success. These areas include ensuring appropriate billing codes are established to align with our administration model, preparing states for DEA rescheduling, KOL interactions and investing in health economics research to prepare for future payer discussions. One additional area of important work is our bidirectional learnings through strategic collaborations with select interventional psychiatry networks. Through these collaborations, we have the opportunity to gain insights and learn from providers in various care settings within the delivery centers. Some of the key learnings include understanding current operating models, how they have adapted to support Spravato and working with the sites to identify opportunities to scale the COMP360 operating model. Ultimately, we…

Thank you, Lori. I'll now step through the Q3 financial results. Cash used in operations in the third quarter was $22.2 million which includes $13.6 million related to our 2023 R&D tax credit that we received in full in the third quarter but had not originally been included in our third quarter cash guidance as the timing was uncertain. Excluding this tax credit, cash used in operations would have been $35.8 million which is at the midpoint of the range for guidance that we provided of $32 million to $38 million. Regarding fourth quarter 2024 financial guidance, we expect net cash used in operations to increase to between $37 million and $43 million which would put cash used in operations for the full year 2024 between $114 million and $120 million, near the midpoint of our prior guidance and includes the 2023 R&D tax credit that we received this quarter and which had been contemplated in the original full year guidance. At September 30, 2024, we had cash and cash equivalents of $207 million. This compares with $228.6 million at June 30, 2024. Debt under the Hercules loan facility was $29.8 million at the end of the third quarter. Given the timing and strategic changes made to the Phase III readouts, we are taking actions to preserve cash and ensure our entire focus is on successfully completing the Phase III COMP360 trials as quickly as possible. Therefore, we will be reducing our workforce, including stopping our non-COMP360 preclinical efforts as well as the potential externalization of our digital tools. Over the last several years, we have developed digital tools and technology to test evidence-based methods for assessing mental health treatments. We are now exploring externalizing these technologies, intellectual property and associated employees to a new company established by our co-founders that could potentially support an evidence-based approach for anyone developing and delivering mental health treatments for the benefit of patients. We are still working through the details and look to have final decision on this externalization by Q1 2025. Collectively, these actions will result in a downsizing of the organization by approximately 30%. While we are still working through the full details and impact on cash, we expect our cash runway to fund operations at least into 2026. Thank you. And I'll now turn the call back to Kabir.

Thank you, Teri and Lori. We're applying the resources necessary to get these trials done as quickly as possible and best position COMP360 for regulatory and commercial success and we continue to actively review all other ways to accelerate the 006 trial. As I mentioned earlier, Mike has been traveling to clinical sites to fully understand where assistance may be needed and directing resources to them. As we encounter challenges, we're addressing them rapidly and applying those learnings to the overall pivotal program. As Teri mentioned, we're also taking action to cut costs, further focus the organization and preserve cash. In saying that, I want to acknowledge that our actions today in reducing our workforce have much bigger implications preserving cash. I know that they will have a deep impact on the lives of many employees and their loved ones. I regret that. And as a management team, we're committed to supporting them through this transition. With our 2 robust Phase III trials and our large Phase IIb trial, we'll have more than 1,000 patients' worth of data from well-controlled trials as well as a full package of supporting studies for a filing. We're confident that we're well positioned for success with a clear plan and a committed team to deliver on this plan. Thank you. And I'll now turn the call to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Ritu Baral with TD Cowen.

This is Athena [ph] on for Ritu. Was your decision to move the top line readout made after additional FDA correspondence or a face-to-face meeting? And do you foresee any other changes to trial operations and conduct?

Thanks, Athena, it's Kabir. Can you just check, you can hear us clearly?

Yes.

Okay, great. So that was a COMPASS decision. It was a COMPASS decision that we made out of an abundance of caution really after observing all that happened through the Lykos process and debating internally around the need to really maintain that blind through the blinded portion of 006. And we said on the trial -- on the call, we continue to look at all ways we can do to accelerate the conduct of 006 and that will continue to be an active effort.

Your next question comes from the line of Leonid Timashev with RBC.

I guess I'm trying to understand how the potential complexities in the trial recruitment may or may not have any impact on how COMP360 would be used in the real world. I guess, is this largely just due to limitations at staffing sites? Or is this something where booking the therapist, having all the appointments aligned is going to be a challenge for any initial commercial uptake? So are there any learnings as you go through the clinical process that might inform how you go about commercialization? Just trying to understand how much of this is also demand versus really just logistical steps.

No. Thanks, Leo. It's a really important question. I mean -- and the fundamental answer is that a clinical trial setting is clearly very different from a commercial setting in the sense of what needs to be communicated to patients and so on. But let me ask Lori to amplify that a little with some of the key differences and how we're thinking about the commercial side.

Yes. Leonid, thank you for the question. So as you know, clinical trials are intentionally onerous because they're working to fit within a regulatory construct. We do not anticipate that it will flow over to the commercial side. Most likely, what will happen in commercial operations when the product is approved, is that it will -- physicians will be regulated based on what they're restricted by utilization management, formulary access and things like that. From an operational standpoint, we are learning a lot from our clinical sites. We're also learning a lot from our key collaborations that we mentioned on the call. And a lot of that has to do with really optimizing the patient flow. And the way that I think about how we will go about optimizing the patient flow which is we're learning from the clinical trials but is not necessarily analogous to the clinical trials is that you have to think about it in 2 ways. One, you have to make sure that the patients are adequately being referred from referring physicians to the trial sites. That's what's happening in the clinical trials. It will be a very similar situation in commercialization, we're going to need to work very hard to make sure that physicians are adequately educated to make sure that they're referring patients to the treatment centers. This requires education, this requires education on TRD. It's really helping physicians identify the appropriate patients and really making sure that they understand COMP360's clinical benefit. This will all come very naturally through sales and marketing effort as we get closer to launch. The second piece of it which I think is important for the underlying piece of your question and that really is ensuring capacity of patient flow at the treatment sites. You can think about this, in my mind, I think about it in 2 ways. You can either go broad and really have an inefficient process where you have a lot of treatment sites and not a lot of patients flowing through or you can think about how you might optimize the opportunity at your sites and really look at a real concentrated effort where you're optimizing opportunities to make that patient flow efficient at those treatment sites. And those are a lot of things we're learning from our collaboration partners. We're taking a look at opportunities there.

Your next question comes from the line of Charles Duncan with Cantor.

Okay. Although I'm a little disappointing on timing, I do really appreciate the focus on maintaining rigorous clinical evaluation and ultimate regulatory success. So I have a question about what has changed over the course of the last 6 weeks? Have you discussed this with the agency in terms of 05? And is it possible that your regulatory strategy in terms of 05 and 06 being necessary has perhaps changed? Or do you have any other thinking about that?

Thanks for the question, Charles. And the short answer is no, nothing about our regulatory strategy has changed at this point. What has changed clearly is a decision around what data we disclose from 006 when but we would still anticipate the base cases that 005 and 006 are needed for a filing.

Okay. And if you could provide a little bit of color on the enrollment patterns. Are you still feeling good about the ability to washout patients from antidepressant meds that are a standard of care? Or is that not a complexifier at all to the enrollment?

I'll pass that to Mike.

Charles, it's Michael. So we are actually seeing a greater than 90% successful washout rate form standard of care coming into the trials. I think we just published and I just confirmed with a guy that it just came out a paper reporting on that from the Phase II study. So this is not -- it's not a logistical obstacle, it does remain a point of education for our investigators and clinicians in the community because there is some -- there is a reluctance to sort of tell patients they do washout. But in fact and from what we observed from the trials, it's not a problem. We have not seen a nocebo effect from withdrawal. And like I said, higher than 90% ability to complete that washout in our trials right now.

We saw that Journal site research paper was helpful. I appreciate that. Last question is with regard to 06 timing, the shift to 26 weeks seems like a year and yet that seems like it could be a little bit longer than you would expect just due to the shift. So is there also a modulation of enrollment or your confidence in enrollment in 06 as well?

Your maths is correct. What I would say is, as we said on the call, there is still some uncertainty around the recruitment curve. I think we're very confident, therefore, on the guidance we've given for the 26-week endpoint but we're doing everything we can to continue to accelerate both with the European sites and also with the expectation that as 005 finishes, those experienced sites that have done well in 005 will roll into 006 which will be an inflection point in that curve. So you're correct, it does incorporate an element of conservatism as well around moving from 6 to 26 weeks.

Super. One question for Teri in terms of more math, checking my math and that is it seems like you have sufficient cash through '25 into 06 seems a little bit more of a stretch to me. Could you anticipate having sufficient cash through the read given the current view on timing for 06?

Yes. Thanks for the question, Charles. So as we had mentioned, we have $207 million of cash as of the end of the third quarter. That gets us at least into 2026. We are -- we announced a restructuring along with these delays, as the trials do cost more as they go longer and so the savings that we anticipate from the restructuring are meant to offset that and preserve cash. We are still doing some detailed analysis on the potential for savings and working through whether we might be able to incorporate additional savings to further extend runway and that is work that we'll be doing here over the coming weeks. So we're very comfortable we'll have cash at least into '26. If we can extend beyond that, that's the work that we're doing and we are committed to being disciplined in our expenses and our spend in ensuring COMP360's success.

Your next question comes from the line of François Brisebois with Oppenheimer. François Brisebois: I just want to touch back on something that was brought up on a prior question about the difference between clinical and commercial. And it seems like the answer was there is clearly a difference at the same time, the education will be similar in terms of referrals on the commercial side. Can you just help us understand maybe why you still feel comfortable with maybe sales potential? And just -- and also as a second question, can you help us understand what needs to be done between these final like data readouts now and launch? And just like what would be a good estimate for a year there?

Thanks, Frank. So I'm not quite sure I caught the second part of the question, what needs to be done in what context, sorry? François Brisebois: In context of launch between the final readouts now with the timeline pushes, just trying to understand if what else has to be done after these readouts to move forward to launch.

Sure. I'll pass that to Lori. Thanks.

Yes. So I'll answer your first one or try to give you a little more clarity around the first one. Again, really thinking about the main question that we get from either HCPs that we're in discussion with or HCPs that we're working with or clinical -- or the trial sites as well as the collaboration sites that we're working with really is about how do you optimize [Technical Difficulty].

We ask everyone to please stay on the line, we are having a technical issue. Thank you for your patience.

Sorry, I think we're back. Can you hear me okay?

Yes, we can hear you now. You may go ahead.

I was just getting going on my excitement for the commercial opportunity here. So I'm not exactly sure where we cut off but I'll [Technical Difficulty].

Once again we are asking everybody to stay on the line. Thank you.

I hope everyone heard all the points around the excitement for the commercial opportunity. But what I'll shift gears to is really what's needed between now and launch. And what I'd like to focus on is what we're actually doing right now, what our immediate focus is. So right now, the things that we need to focus on are really increasing the awareness around TRD and educating on COMP360 Phase II data. That's what our MSOs are out in the field doing right now. So that is a very concerted effort. And obviously, we're learning a lot from the feedback from KOLs around that. Another important area of focus for us is really making sure that states get rescheduled in a very timely manner after DEA scheduling. That is an effort that is unique to us, given that we're currently sitting at a Schedule 1 product so we need to be able to get the states rescheduled in a timely manner in order for physicians to prescribe and we can distribute the product to those states. The other effort that we're really focusing on, again, I've said it a couple of times, was really focusing on how we optimize that patient flow. And again, that's learnings through our collaborations and the partnerships that we have in place as well as anything that we learned from KOL interactions with our MSOs and obviously, from the clinical trials. And then, of course, we are acutely aware of the importance of getting good formulary access. And so right now, our ATOR team is working diligently to build a robust information set so that we can be armed with good data to present to payers when the time comes. François Brisebois: Yes. I mean maybe it's my phone in terms of the commercial point, I didn't hear anything but maybe others did, I'm not sure.

Yes, we're having some technology challenges here. So I'll just -- I'll revisit some of the reasons why I'm excited for COMP360 and that's probably a better approach. I think we have a lot of learnings to do. We have a lot of challenges that we'll need to overcome but we have time to figure those out. Being first to market takes time and we are -- we will be first-in-class first to market and that is a situation where you need a lot of time to think through strategy and planning. And so we have time to work through some of these complex issues that present themselves with the administration of COMP360 and figure out how we can optimize that patient flow. The reason I'm excited is you have a great analog in Spravato. Spravato, again, launched into these interventional psychiatry centers and they were able to adapt and we all know it's well on path to be $1 billion product. They've steadily grown their sites since their launch and they're now sitting at well over 4,000 sites. There is a natural overlap with prescribers, obviously. It is the only marketed TRD product out there and our prescribers will be natural overlaps.

Our next question comes from the line of Vikram Purohit with Morgan Stanley.

This is Morgan [ph] on for Vikram. So we have 2 on the 005 program. First, would you expect to change the profile of patients enrolled in the trial given the delay? And second, given the delay or any of the parameters of data that you'll report for this release is different versus prior expectations?

Thanks, Morgan. And I'll answer both, no in both cases. So the focus is on recruiting exactly the same patients consistent throughout the trial. And in terms of guidance about what we released today was clarifying what we had always expected to say. So no changes on either of those.

Okay. And if I may squeeze one more question in there. How is your focus on non-TRD indications, including PTSD impacted by these timeline delays? I know you mentioned deprioritization of preclinical efforts but what does it look like for some of the clinical indications?

So as you know, we have clearly said PTSD is an area of significant interest, a very high unmet need. We have very compelling, albeit small data set from Phase II. What we've also said is while we have planned for moving that ahead, that is not in our current runway so that situation has not changed. We have plans in hand but we're not in a position to execute on them at this time.

Your next question comes from the line of Elemer Piros with Rodman.

What I'd like to ask is about the eligibility for retreatment. Is there any difference between the time period between week 6 and 26 and between 26 weeks and 52 weeks? And maybe a part B to this question is, how do we define relapse? And if someone went back on to an antidepressant, do you want them to wean them off before retreatment with COMP360?

Guy, if I may ask you to take that.

Elemer, the second question is quite simply that if people have gone back on to antidepressants, then they can stay on them, particularly this would be in Part C, where this will commonly occur we think and we'll obviously offer quite important useful information about the feasibility of administering the drug as a co-administration. The criteria for retreatment are simply a threshold on the MADRS and they're not different between the 2 phases, B and C. So either patients who have not recovered or patients who have recovered and then relapsed, have to meet the same criteria essentially.

Your next question comes from the line of Gavin Clark-Gartner with Evercore ISI.

This is Yesha [ph] on for Gavin. For us, you noted for 005 that you won't be providing a detailed safety table but you'll be providing comments on potential suicidal ideation imbalances. We were just wondering what rate do you and/or the DSMB consider an imbalance essentially? Just how is that defined? And what will the update kind of look like?

So I'll start. I mean the DSMB is independent. So it's up to the DSMB to tell us what they consider an imbalance. But I don't know, Mike, if you'd like to add anything to that at all?

Yes. So I don't think we're in a place where I can give you quantitative criteria, I think that it depends on the degree of imbalance but also on the nature of the cases and severity of the ideation or planning, et cetera. So this is a place where we have -- and as Kabir pointed, it's an independent DSMB and then the charter gives them a lot of latitude in that space. So what -- so I'm going to park the response there. I don't have a number to give you, it really depends on their clinical interpretation of the cases that they see.

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

I have a few questions. The first is, is the expectation that you will continue to need data from both COMP005 and 006 to submit the NDA for COMP360 and TRD? And secondly, can you tell us if the expectation is that there will be an advisory committee to assess potential of COMP360 and TRD? And then can you talk more about how the data that's generated from these trials, the 005 and 006 trials, with these updated timelines discussed earlier should put you in a better position to address potential questions during a potential advisory committee?

Thanks very much, Patrick. So I'll answer very quickly. Yes and yes to questions 1 and 2, we continue to guide that we will need data from both. We absolutely expect an AdCom based on the fact this is a Schedule 1 product and the precedent is always there will be. And for the third part, I'll pass to Mike.

Remind me the third part again.

Which is do these changes help us, we believe, put us in a stronger position to address issues that might come up at an AdCom.

Well, I mean, I think to the extent that we preserve the integrity of the 006 study and reduce any bias in terms of unblinding, yes, it helps us because clearly, the agency while aware of it, just wants sponsors to do whatever they can to minimize the functional unblinding, I was just going to add to Kabir's comment, we're going to be probably first-in-class. And generally speaking, for first-in-class, the agency generally calls for AdComs even in areas of mundane as antibiotics, so.

Right. That's helpful. And then just can you frame for us more broadly as we think about compounds that have been approved recently, trials that are underway, what would be considered a positive outcome in terms of improvement on the MADRS scale in a Phase III TRD trial both in terms of reduction from baseline and active treatment relative to placebo? And then separately, I'm wondering as we are going to see the top line data from the COMP005 trial, how do you envision that, that data will read through to the 006 trial just given the differences in the way these studies have been designed?

So processing your question here about effect size. So I would say, well, we're -- well, let me see if I can sort of answer your second one first in the sense of the impact of -- so this is one of the reasons why we are limiting the amount of data that we are releasing from 005 because we're going to be releasing data while 006 is still in sort of both -- some Part in A and some patients in Part B so we want to be really prudent about how much we put out there. We're also -- the sites that are running 005 and 006 at this point are none, so we don't have any sites that are running both studies at the same time. So they're nonoverlapping sites and they are -- and other than the U.S., through different geographies as well. So we are doing everything that we can to minimize or blunt any sort of read-through from 005 to 006. Now obviously, we're hoping [Technical Difficulty].

Ladies and gentlemen, this is the operator. I apologize but there will be a slight delay in today's conference. Please hold and the call will resume momentarily, thank you for your patience.

It went back on, just went back on.

Okay, all right. So let me just finish the last one. So what are the other ways...

You may resume the conference.

Okay. Once again, our apologies for platform issues, we don't know what's going on but we'll work through them. Let me just finish the last part of this and as I promised I will hand it back to [indiscernible]. For us, success is detecting a clinically relevant difference in TRD that varies maybe a little bit lower in terms of effects as compared to NTD just because of the difficulty of the population. So I'm going to defer to actually give you a number on exactly what that effects looks like in points on the MADRS. We're just -- we have adequate power for clinically relevant differences in our studies.

Your next question comes from the line of Tom Shrader with BTIG.

I'll be quick given the situation. Given the comments about complexity and all that, are your dropout rates tracking as expected? And you haven't said you're adding patients. Are you?

Mike?

Yes, so the attrition rate is actually running a little bit below our plan. So subjects are staying in the study. So we are not experiencing a higher-than-planned attrition. We are not changing the sample size. We are not doing any adjustments to the sample size in the study. We are emphasizing and for I hope reasons that are very clear how to accelerate recruitment to complete the studies as quickly as possible and how to enhance retention so that we minimize our missing data problem. But for the moment, attrition is well within planning parameters.

Your next question comes from the line of Sumant Kulkarni with Canaccord Genuity LLC.

I have 2 for 005, roughly, what percentage of the trial participants do you expect would have completed the 26 weeks at the time you announced the 6-week data. And what prompted the decision to announce top line at 6 weeks for 005 versus waiting for the full 26 weeks which might give us more insight into durability of treatment as well? And I have a follow-up after that.

Yes. So Sumant, I can't give you an answer to the first part but just to be clear on the second, we have always guided for releasing 6-week data of 005. I think as you're very well aware, the designs are very different in 006, that is a design that the agency themselves recognize is the best possible to preserve blinding and that's why our focus on preserving blinding in 006. So our decision on 005 has never changed from what we've guided in the past.

Got it. And then a commercial question for Lori. Do you think the current Phase III program gives you enough commercial firepower to address what pretreatment schedule might be needed in the real world as that has potential implications for pricing?

Yes. I'm sorry. Could you -- would you mind repeating the question?

Does it give us enough data for the dosing schedule and therefore, to address pricing in the Phase III program.

We believe it does. And we think that it will be a very important piece of information and relevant to payers and to see what that looks like.

Seeing as we do not have any more questions at this time, I will now turn the call back over to the management for closing remarks.

Thanks, Louella. And first of all, again, our apologies for the quality of this call, we will clearly be taking action around that in advance of our next call. So I'm sorry about the interruptions and thanks for your patience. We at COMPASS are completely focused on the execution of our pivotal trials, while as we've said, continuing to maintain the highest quality with an urgency and a commitment to bring COMP360 to patients in need. Our confidence in COMP360 remains steadfast and we are excited by what's ahead. Thank you again for joining the call today and we look forward to further conversations with all of you. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.