Q2 2022 ATAI Life Sciences NV Earnings Call
Turning around our CEO of flooring and brand and Stephen Gordon, Our Deputy CFO , who joined our team last month and was most recently from bridge vial.
Today is my last earnings call as the CFO I'm very pleased and confident to be handing the CFO reins over to Stephen who.
You'll be taking on the role as of Tomorrow and will remain on as the advisor to the company through the end of the year Steve.
Stephen you want to jump in and do an introduction.
Yeah of course, thank you so much Greg and I'll keep this brief.
I am incredibly honored to be selected as the next CFO of a tie my first month at Italian has been incredible.
Thrilled to be joining this fantastic team and I can't wait to make a huge impact in the field that mental health.
Back to you Greg.
Thanks, Stephen it's great to have you on board.
But today the interview format will be led by two of our long term analyst Andrew Tsai from Jefferies Judah Frommer from credit Suisse over.
Over the next 30 minutes, Andrew Juno will be asking a series of questions on our Q2 activities pipeline and a business update.
So forgive me for this but as a reminder, our discussion today may include forward looking statements about future results and performance.
Due to risks and uncertainties that may cause actual results to differ.
Hey, Todd it's not undertake any obligation to update such statements, which speak only as of today.
And with that out of the way and just before kicking off an interview.
I'll briefly comment on the key financial takeaways for the quarter as we reported in today's earnings release.
First our Q2 operating use of cash was $23 million and was in line with expectations. So no surprise there.
Second in addition, let me draw your attention to the other press release from a tie this morning, where we importantly announced that we've added our Hercules debt facility of up to $175 million.
Third and really the critical point.
Is that with the combination of $312 million in total cash and.
In addition to the debt facility, it's approaching $5 billion, we have a very strong runway, which in combination with a pipeline prioritization and some thoughtful cost tightening we now forecast runway of extending into 2025.
That's a full year beyond the earlier guidance and an important takeaway here.
And as we continue to exercise a disciplined use of cash in this challenging macro environment.
So with that let's move into the interview section here I will hand, the mic over to Judah from credit Suisse to introduce himself and Chickasaw Judah.
Great. Thanks, So Todd team for having me I'm inviting me to participate Greg It's been great working with you and best of luck in your future endeavors, Steve and welcome to the team as all are excited to work with you.
So maybe just kicking off with a financial question.
This has not been an ideal time, maybe outside of the last few days for smid cap biotech to be raising capital and in light of your recent news you have reasonable runway and a broad pipeline already in clinic. So how should we think about priorities for capital allocation over the next 18 or so months and how does your current runway factor into.
Yes.
Peter we are very very confident in the measures that we've taken to extend the runway as Greg mentioned by one year into 2025, because we believe that the combination of the non dilutive financing.
Facility of Hercules of up to 175 million combined with a very intentional strategic and thoughtful way of re prioritizing our pipeline.
Puts us into the position to now really execute and focus in a focused way on.
All the very meaningful.
C data inflections that sit in the 7% seven clinical programs and soon eight clinical programs that we are focused on going forward and we believe that this will be appreciated investors and not needs. We.
We don't anticipate any additional funding to actually deliver on those POC Readouts I mean, I think that's an important takeaway for investors.
Okay. That's really helpful. And then should we read that as an inclination to further focus on on later stage programs potentially at the expense of earlier loans, our business development activities or should we continue to think of a tie is in the process of further building our broader neuroscience platform.
Yes, I would like to emphasize that we have over the last years build a very very strong.
Pipeline and platform already with many clinical programs, but also many enabling technologies that together with our clinical programs and our perspective has been the path of improving very very effective and efficient when it comes to in a very.
Im focused way develop those compounds and that puts us in a very strong position to have a great basis to execute on the current trials and to your point, we will focus more on the clinical programs.
And going forward and we can go into those in.
Into those a little bit further in this call for sure and on the BD side.
Continue and you know BD or M&A is in our DNA, we have build a tie us to be aggressive M&A and BD and especially in those depressed valuations that we're seeing we are continued to be.
Very very active.
And are on the lookout for assets companies technologies that can accelerate our existing pipeline.
Or can be very complementary or complementing the existing pipeline and.
<unk> basically adding programs with our near term value inflection points. So that is where we are active in with a.
Focus in the near term future definitely on clinical programs.
I was just going to reiterate.
So the programs that we saw.
Like to prioritize are all going to be a decline by the end of this year and all of these will generate a meaningful meaningful clinical results proof of concept data within two years. So that's really the way to think about it.
That's been better than the.
The model here in terms of prioritization in the next little bit.
Perfect.
And and so speaking of like you guys, focusing a little bit more on the clinical stage portion. Maybe my question is a more holistic question is as we think about.
For instance industry peers compass, they are technically pioneering the space in a sense. So.
Are you pursuing later stage studies.
Should we expect you to kind of follow up his footsteps.
In phase two for example, they did dose ranging phase III, who knows if they do a placebo.
Comparator, but.
Could you kind of follow their footsteps innocence.
Yes, I would say that we're actually already following in their footsteps in many ways right. So their first trial was as you said it was basically single dose dose ranging and that is exactly what we're doing with our perception study right single administration and dose ranging.
And in both central where I can say some very definitively for perception, we know that we're going to need multiple doses right its academy kind of annoyed.
Multiple doses are required but the idea of that first study was to really get a good handle on duration of efficacy of course that magnitude of efficacy and so thats. The data that we're going to say board and help design that makes that next trial and again I imagine that.
Company is doing something very similar.
And before I turn it over to Judy.
They are technically we learn leveraging some digital tools and phase III plus psychological support.
It's apparent that FDA is on board with this.
Could you incorporate these dynamics within your studies, even as early as phase II for instance.
Well we have been.
We are working on additional technologies for a while now right. So we actually announced introspect, which is one of the focus areas within the company two years ago or two years ago. So our digital technologies have mature to the point, where they are in clinical testing now so really kind of more user acceptability type trials, but in Kettering clinics. So that we're getting all of that.
Later, we need to really help the content right. So we're adjusting contents as well and we're actually deploying these very soon in our phase one trials with both radio.
So the phase one of course these are healthy volunteers, but they still require prep work.
And they are.
Some support post dosing so the digital technologies will be used there and then of course.
Well the non subsequent phase twos.
Before you jump in I would like to remind investors quickly actually why we think digital therapeutics are important.
If you remember.
We're really about achieving clinically meaningful behavioral change in mental health patients.
Intending to really achieve durable.
Behavioral change and be pursue this through our three pillar strategy. One is to focus on differentiated and more rapid acting pharmacological interventions that we believe.
<unk>.
All strong euplastic effects that and used this window.
Behavioral plasticity that we then want to leverage exactly to those digital therapeutics, such as our interest back to really help foster.
Habits through cognitive behavioral therapy elements and multiple other content elements that we believe can effectively be delivered through digital means. So this is the ongoing psychotherapy pubic support elements of pillar two of our strategy and then along the way us and harvest are harnessed that data that we are going to be collecting.
By digital Phenotyping for example, but also looking at biological Biomarkers potentially year to move us to a more precision psychiatry approach.
Thinking about treating patients given the very heterogeneous nature in this patient population. So very very exciting excited to see the first technologies applied actually in the first clinical study now.
Our <unk> program.
Well technically speaking, we could get some early data and that kind of over the coming months with the digital tools that's correct. Okay.
Okay.
Yes.
Great and maybe just sticking with compass for a second here it sounds like we'll get a detail of their phase III trial design around October I think at the latest so what would you say youre looking for in terms of trial design that could carry a read across beyond maybe the.
The digital components for pipeline programs at a time.
Well I think we have hit on one of course digital ones. They know what their perspective is on that and how they want that characterized validated test and I think that would be really interesting on the other piece is the one that I alluded to earlier right and thats the repeated dosing.
The agency would look upon that.
What are the implications potentially in part Sox testing right what are they looking for there what are they looking for in terms of long term data.
Are they looking for repeat dosing within that are there do they want to cede meeting the Ics guidelines that are 100 subjects approximately at the end of the year and these are the sort of questions that obviously, it will impact us over time.
There are other things that would be interesting I can't imagine it will be very controversial stock line.
Placebo versus dose control and there is lots of lessons from both I can then be very calm.
That would be a much of an issue with the <unk>.
Other ones are a repeat dosing et cetera would be really interesting and obviously very impactful for our studies.
That's helpful. And then just hitting a couple of changes that have gone on encompass given your minority stake there any quick thoughts on the anorexia nervosa indication and have you guys interacted arm in a significant way with the new CEO .
In fact, we have we actually had a call I believe one five weeks ago with <unk>. We believe it is a great choice or cloth accomplished support for that decision I think he is definitely the right person is also the right skill sets to now move that accompanies through phase III and hopefully.
To approval and then.
How is also the requisite experience of how to effectively commercialize.
Drops I believe that is a very great set up for success for compass going forward with him spearheading its end.
George also staying on board as chairman. So I believe we have a very very strong solution here for campus and we also partnering for going after.
<unk>. This is a really really significant.
Significant unmet needs in psychiatry. So there is no approved.
Drugs, and we see a great potential for <unk> hundred 60 here, giving the early given the early signals.
That we saw based on their open label trial and believe that this is brain.
<unk> smile too.
To pursue from our perspective.
Just one small follow up I was just curious if you guys think navy at the FDA.
<unk> phase IV as a pivotal study potentially.
I guess, it's hard to say, but.
Oh, yes, yes any thoughts.
I mean, clearly there is precedence for using phase III data as supportive data right. So if one of the phase III trials as sort of marginal and there has been certainly precedence for the agency will accept a phase II to though is much more robust.
Or are they truly accepted as a federal I don't know I mean, that's.
Clearly during the earnings call Compass did emphasize.
Two are leased more than one certainly phase III study.
Not obvious whether or not they also.
Including a long term follow up study so we'll get more clarity over the course of the next little bit I'm I'm personally a little skeptical of that but that doesn't get the costly or other data centers. So obviously disappointed.
Okay.
Alright, perfect, maybe maybe switching gears to PCM mono one if we could.
Certainly the program, we got the most inbounds on lately so with a couple of Readouts expected end of this year can you remind us of design timelines.
<unk> for success for the Phase Iia and how its clinical expansion into the U S has gone on.
Along with the drug drug interaction study and the sub Q bridging study so.
<unk>.
Now Theres a lot Don Doug So yes.
Just to level set with everybody as I mentioned the <unk> the face.
Phase two double blind placebo control study again, following the footsteps of encompass.
The administration is IV.
Case volume and it puts us with Janssen so.
We are looking at.
Basically two doses.
Our ketamine one is subs associated the other ones are thresholds associated on 30 milligrams, and 60 milligrams, respectively and enforced.
Third arm is placebo 31 subjects in each one of those arms primary outcome measure is 'twenty Madras 24 hours. It's also looked out over the course of the next.
Seven days and 14 days. So that's the outlines of the trial recruitment is going really well, we're very excited about that and this travel.
Completely on track for a readout by the end of this year.
In terms of U S expansion as you.
Of course, the announcement earlier.
Earlier this year you guys.
The answer was on clinical trials Gov, it's going really well and so far as there's 10 sites in the United States that are currently recruiting and there's three others that are in the process of coming up online so again going really well.
Now you also mentioned.
In terms of what our threshold and was successful client it's important to go back to what our premise here is that premises at home use so our thoughts on that are pretty straightforward I mean, obviously it has a good efficacy.
The mattress industry.
Minimum clinically important differences to we hope to see more than that versus placebo.
I was wondering borrowers, but the other element there is tolerability specifically regarding association.
And as.
As you guys are probably very well aware providers quite the associated <unk>.
The doses required for efficacy.
We hope to be much lower in that regard if not within the normal around that's really going to be there will be an important factor of course and the decision making process that the FDA has supported so that's that's kind of a big picture there in terms of what we are looking for.
Okay.
<unk> has sub Q yeah.
Yeah, So <unk>.
That's still in planning.
Basically we're moving that forward towards initiation at this point, but yes, I mean basically right now is IV, we have sub Q formulation that was then there will be testing looking for relative bioavailability items too.
These two different routes of administration understanding what the dose level is that what you need for comparability there.
Of course that would be what we say quarter in subsequent trials that's much more suitable.
Imagine for repeat dosing sure.
And you mentioned the DDI study as well so the DDI study is really focused on.
<unk> four inhibitors.
2019, and looking at the impact of those compound the PK of <unk>.
And so that trial is the clinical base.
The clinical dosing and everything is completed at this point so it's under analysis now and again expecting topline.
Sorry about that before the end of this year.
Right.
And.
I'm curious two points technically is the fundamental.
Attributable I guess delta in a sense that maybe.
Maybe the maybe the market or the street prefer something more similar to <unk> wireless ketamine.
Additionally shows is that fair to.
Think about as we think about the top line data in terms of the delta of drug versus placebo.
Yes, I mean, I think it's a very valid point that so just kind of thinking through what the date.
Probability of package or as Kevin one was I mean as Kevin was it was basically they had three trials transfer one two and three and then they have this long term that really the only truly positive truckloads of transform two transplants move at a four point delta on the mattress.
And that's I think that was a 28 day. So that's yeah. That's a good bar, but of course that was a lot of going into the clinic.
Hey.
Neither the minimum bar for me its not great, but the minimum bar would certainly be to cros that are rapid onset right. So that differentiates you completely from an SSRI.
Or either weeks.
Month or months to get up because we have you can get that same level of efficacy in 24 hours.
That's a win right and with Ketamine Youre going there every youre already there twice a week before weeks Youre going there once a week for the subsequent bolus. That's a lot of travel so a lot of time and committed right. So if we can do this all at home I think we ought be along with us.
I think that remains a very strong win.
No.
And how reliable quote unquote reliable are Transplantable do you think this data set with the assuming a successful because my understand I'm presuming, it's done in an inpatient setting where Ashley is.
Eventually you want to go at home. So do you have any color around that around how you're thinking about this.
Yeah.
Two elements of that so the first is the PK piece right. So there is a changing of route of administration. So there will be an impact on VK. So we're obviously generating data with our current administration protocol, which is 40 minutes.
Continuous infusion so of course, we need to understand what the PK of yet subcutaneous formulation and we've got some parameters that we want to match their rates of the AUC. The C. Max are all things that we want to look at and of course, that's where that will be driven by the phase one.
So that will have some impact on efficacy and of course youre right in house may have a different effect it should impact placebo and drug stores. Similarly, I mean generally going to a clinic is going to drive up. Your response is going to drive up your placebo response, Bryan. So we may actually have a better signal noise ratio.
If we're at home purely speculation, but how quickly you have the displays.
And maybe one more question.
I noticed in the press release.
The bridging study could complete within the next few quarters.
So as we think about the next steps afterwards that technically is the gating step before you move to a subsequent study.
After the stage two.
Well there is also some additional talk some of the things that are also on track.
There are a few pieces that have to come together that is one of them certainly.
Yes of course.
So we need those results.
I'll get into that to support the next trial.
Great. Thanks.
Okay, if I could move silver.
<unk> 007 and.
Cif so.
There have literally been dozens of compounds and Cif that have failed some with similar pathways even.
Seven in your view, how much of that can be attributed to a chemistry or target selection of those compounds versus trial design.
Well, let's focus on the chemistry, but for the moment.
In general over the last several decades, there's been this concept of being really reduction is on the phone calls right trying to find that piece of pharmacology thats driving the efficacy and make very clean drugs for it.
Certainly thats true with Ssris as an example, but also the range of clients and colleagues to some degree but the reality is a dirty drugs tended to work a little bit better in most of these indications.
The nice thing are the interesting thing about <unk>.
<unk> is it selling pharmacology it.
Absolutely got a Gaba mediated activity and that would be mediated activity, but it also is building surge within corners with us. So that is a point of differentiation compared to some of the other things that are currently in development, which are much more focused so I think thats an interesting angle of course is consistent with our model we have.
We have existing clinical data, albeit in a different and different groups. So we have one.
In diabetic peripheral neuropathic pain that is a population that probably in general has some degree of subclinical cognizant chairman of Europe . They are vascular path. That's why they have diabetic peripheral neuropathic pain they.
They presumably have some central vasculature compromise as well so we saw a signal there we saw it in normal healthy volunteers, we saw some signal in our.
Equivalent mechanisms that trial, we saw an inverted U shaped curve, which is consistent with the hypothesis. These are the cognitive effects. We saw a change on quantitative Angie that was sort of mirror that as well so again consistent with our influencers. So yes, we got a lot of things going in our favor link has gone down.
Not disputing the fact thats a challenging indications.
Trying to walk away from that at all.
As with the clinical trial design. It's an interesting question. So there's been a lot of development for an extended period of time on endpoints with us. This mcd as this is as broad recognition of the unmet medical need in syndication right.
FDA has been all of those for a very long time other industry partners have been involved with this entire thing academics are involved. So yes. There has been we have a nice consensus battery on what the endpoints would look like.
There has been evolution on that a little bit in terms of being more focused on some of the endpoints. So that's something that that's there.
Then our subset that's been ongoing so I think overall there is probably a lot to do with the pharmacology to some degree around the <unk>.
End points, and particularly the ability to now focus on subsets of those endpoints.
And that makes a lot of Samson and then where do we stand on potentially improving the dosing profile and what's the latest in terms of next steps on the decision about whether to pursue a phase <unk> in Gulf or an end of phase II meeting or do you have an additional phase two and what could preferred endpoint selection.
Sean there.
Okay, well, let me take that loss, but first so we are indeed pressing for our base to be at this point.
And the endpoint is going to be <unk>.
No.
You may recall on the last study we saw symbol coating.
A very positive backdrop simple coating is very good overall correlation with the FCB. So we take comfort in that in terms of.
Some degree of proof of concept in fact silver guarding as part of the CCP. So.
That's why we decided to move forward with that.
The trial will be robust and it will certainly support an end of phase two meeting assuming of Corresponsive results now in terms of pathology. This is one where this is an area that we've got to improve on investment angles, there right now with us in Tid.
There is a good argument to be made that you can make it the IV.
We could of course use formulation technology to make a Q&A and of course that would be great, particularly keeping in mind. This patient population. So that that's been rising and we're looking at we could bridge to that in a later point.
That's helpful. Thanks.
And with that we are unfortunately already.
Out of time, so I would really like to thank you Andrew and Judah for dialing in today I found this very very insightful and interactive. Thank you so much for asking these inquisitive questions today.
And I would also like to express my gratitude to Greg.
For your servers.
Oftentimes and to drive forward, our Michigan with so much passion.
Really thankful for your service you have been an instrumental part of our leadership team and I'm also very grateful that you stay in another couple of months until the end of the day.
Year to ensure a smooth transition when youre hanging over your CFO .
CFO .
Job, two Stephen and <unk>.
Stephen really thrilled to have you here you bring with you a lot of expertise and.
Experience with that model that we're pursuing so this decentralized way of developing drugs and couldnt be more happy to have you on board. So a warm welcome to you and looking very much forward to work with you going forward.
And ultimately I would like to.
Reemphasize I guess the key takeaways from my perspective to our investors, we have taken very very strong and thoughtful measures to extend our runway by one year into 2025. We believe this has this has been the right strategic decision by adding non dilutive.
Depth financing of up to $175 million is a very intentional and thoughtful re prioritization of our pipeline because in our perspective. This.
Puts us into position to really focus on the key value inflection points in our.
In our programs and seven out of eight are in the clinic right now we assume to have eight into the clinic and by end of this year and there is a lot of proof of concept data sitting in there that we intend to report out over the next two years and with that alright, thank everyone to dial in and wish everyone.
A very great day. Thank you.