MNMD Q2 2020 Earnings Call

Operator: You have joined the meeting as an attendee and will be muted throughout the meeting.

Collin Gage: MindMed Q2 2020 Earnings Call. Leading the call today will be MindMed's Co-CEOs, JR Rahn and Stephen Hurst. Please direct any questions you may have by email to info@mindmed.co and they will be addressed after the formal part of the call. Steve you may begin the call.

Stephen Hurst: Thanks very much Collin for the introduction. Good morning and welcome to MindMed's earnings call as we continue our mission to discover, develop and deploy psychedelic inspired medicines to alleviate suffering and promote health. I'm Steve Hurst, Executive Chair and Co-CEO of MindMed. We appreciate everyone taking the time to join our call today as our summer in quarantine continues on. I am also joined today by my Co-Founder and CO-CEO JR Rahn, our newly appointed President focused on our clinical strategy and LSD program, Dr Miri Halperin Wernli; our CFO, Dave Guebert; and our Chief Operating officer, Carol Nast and Shah Hafizi, our Corporate Council. There are some silver linings to COVID-19. One of these silver linings we are finding with COVID is our ability to attract top-tier talent from around the world, and built a very strong team. The company was built to function in the geographically distributed manner due to the requirement of developing psychedelic inspired medicines. Due to this operating structure, MindMed has continued its invaluable work uninterrupted and has been able to make significant strides over the last two quarters; adding further firepower to the leadership team and executive committee, we are very excited that Dr Halperin Wernli has joined us as we ramp up our clinical trial pipeline in the coming quarters. She will help us execute and guide our clinical development strategy as well as overseeing our LSD clinical trial programs, including microdosing and experiential therapies as part of project Lucy. With a background in psychiatry, she has held worldwide senior leadership positions in product development, research and development; and strategic marketing at leading pharmaceutical companies including Merck, Roche and Actelion Pharmaceuticals. I'd like to draw your attention to the fact that the conference call will contain forward-looking information which may include but is not limited to statements with respect to anticipated business plans or strategies of MindMed. Forward-looking statements are made as of today's date and involve known and unknown risks, uncertainties and other factors, which may cause the actual results performance or achievements of MindMed to be materially different from the forward-looking statements. We draw your attention to the full disclaimer contained in our filings. We have scheduled a maxim of one hour for the call. And I will now turn the call over to our Co-CEO JR Rahn. JR?

JR Rahn: Thanks Steve. Appreciate it and I want to thank all of you for joining us today. The psychedelic inspired medicine market is growing and advancing by the day. Actually Steve and I were both discussing this on Friday on how fast it actually has picked up since we really made plans to go public last summer. And I think this is very encouraging; we saw some also encouraging news from the Canadian Health Minister and Health Canada this month approving the use of psilocybin and for end-of-life cancer patients through compassionate access. We think this is going to help further deflate the stigma around psychedelic substances, and working with psychedelic inspired medicines. It's encouraging to see more regulators around the world acknowledge the medicinal benefit of psychedelic inspired medicines; in fact, compassionate access to psychedelic inspired medicines has been available for many years in Switzerland where we operate. This was actually first pioneered by MindMed's Clinical Advisor Dr Peter Gasser and other therapists to bring that potential to two patients suffering in Switzerland. We are now beginning to see multiple new entrants and clinical research advancements coming out of universities, and other companies. Some extremely encouraging; some less encouraging while all this is ongoing, our mission at MindMed remains important. And we want to offer a better tool set to both patients and therapists to address mental health and addiction. So we're going to continue to evaluate collaborations and also acquisitions that will help us build a unified and comprehensive toolset for patients and therapists. The quarter that just ended was a milestone period for IT developments, technology acquisitions, clinical advancements and the building up of our team. We are very excited to now be joined by Dr Halperin Wernli as we also expand operations in Europe and ramp up our clinical trials on going there. Our Switzerland unit will be responsible for Europe and oversee clinical development there, scientific collaborations and the expansion of MindMed overall business in Europe. We will further be building out the team there, and foster our partnership with the University Hospital Basel’s Liechti Lab. As an executive team, we are pleased to report a strong cast position of US $24 million at the close of Q2. This allows us to efficiently execute on multiple clinical trials in our fast-growing development pipeline and fund additional R&D we find promising to the psychedelic inspired medicines market. The second quarter of 2020 has proven to be a pivotal time for MindMed as we matured from a company developing a single compound into pursuing three commercial clinical trials and additional R&D projects and trials for psychedelic inspired medicines including work in LSD, DMT and MDMA. Today, I want to discuss the key milestones we have accomplished across our business, all of which solidify MindMed's position as a leading neuropharmaceutical company for psychedelic inspired medicines. It is vital for us to remain focused on our objectives in building a comprehensive tool set for patients and therapists. We seek to transform these once stigmatized substances into protected, federally approved medicines. Our drug development programs will continue to employ best-in-class practices, and be in strict compliance with drug development; regulatory and supervisory bodies such as the FDA. I want to begin today by addressing the 18MC addiction program; 18-MC which many of you know was derived and synthesized from ibogaine, and has been proven effective for treating addiction in animals. We've made some great progress on 18-MC over the last quarter. Due to the impressive work by our team, we have successfully completed dosing humans in Phase 1 SAD or Single Ascending Dose portion of our clinical trial. The multiple ascending dose portions continue to progress as scheduled. This leaves the overall program on track to tentatively begin its scheduled phase II trial of 18-MC in Q4 of 2020. We look forward to announcing more results from the Phase I trial in due course. On the experiential side of our business, experiential therapies, I want to discuss some exciting new developments on the project Lucy program. We intend as a company to initiate a Phase 2b human efficacy trial focused on experiential doses of LSD and administered by a therapist. We are currently preparing a briefing package for a potential IND with the FDA. Due to our strategic partnership with the University Hospital Basel’s, MindMed has also received the data and worldwide rights to an ongoing Phase II trial for anxiety disorders administered by the world leader in Psychedelic Pharmacology and Clinical Research, Dr Matthias Lichty, and also a psychedelic therapy expert Dr Peter Gasser. Dr Gasser has now formally joined the company as an advisor. We believe that his know-how and the data that we are going to acquire from this clinical trial will help build MindMed understanding of LSD for anxiety disorders. MindMed's team is working hard to prepare and analyze data relevant for the discussion with the FDA. These efforts and our clinical strategy around LSD are being led by Dr Halperin Wernli. This is the first experiential psychedelic assisted therapy to be added to the company's drug development pipeline. With this addition mindmed is now preparing a total of three Phase II commercial drug trials based on psychedelic inspired medicines, making it one of the most advanced and largest drug development pipelines in the psychedelics industry. In our microdosing division, we are hard at work at preparing the start of our Phase 2a clinical trial, proof-of- concept for adult ADHD. The trial is scheduled to kick off in both in the Netherlands and Switzerland by the end of the year in Q4. MindMed has previously signed a clinical trial agreement with Maastricht University which is a world leader in microdosing research based in the Netherlands. We will also be working with the Liechti Lab and Dr Matthias Lichty to undertake this trial. In addition to the microdosing trial, our collaboration with the University Hospital Basel’s continues to progress. We have added and previously announced that Phase II clinical trial evaluating LSD for the treatment of cluster headaches. Cluster headaches are often and under underappreciated in terms of their severity that affects patients. We hope to provide further guidance around the potential for LSD and treating cluster headaches; and we will assess if there is clinical evidence for a future commercial drug trial through the FDA pathway at a later date. Another important addition to our portfolio is the extensively studied compound MDMA. This development comes as part of MindMed's exclusive license and collaboration agreement with the University Hospital Basel’s Liechti Lab. We gained access to over a 10-year research on MDMA. And we believe this will be crucial to us as we look to add MDMA as a component to some of our next generation therapies that we are developing in collaboration with the Liechti Lab. We are also looking at DMT; we provided startup funding for a Phase 1 clinical trial, testing various intravenous dosing regimens of DMT; expected to begin in Q4 of this year. And we look forward to making further announcements around that trial as it begins. This really brings a conclusion to the updates that we have to provide at this time. We continue to evaluate other collaborations and potential acquisitions to further our mission of providing a tool set for therapists and patients for psychedelic inspired medicines. I'm going to turn it back over to my Co-CEO and Chairman, Steve Hurst.

Stephen Hurst: Thanks JR. And I'm sure everyone really appreciates that update. MindMed is fortunate to have a seasoned team of experts in their respective fields to carry our mission forward. Throughout these trying times, we are lucky to have been able to keep progressing, given the increasing need for alternative mental health solutions. I'm sure everyone is aware of the impact COVID is having on mental health throughout the world. Now with that we turn to our earnings report. Our 2020 financials have been audited by RSM Canada LLP, chartered accountants. The auditors presented their report to the MindMed Audit Committee and the Board, and the Board accepted the report on August 12, 2020. And I'm going to make a correction; RSM had -- our quarter has not been audited, it has been reviewed by RSM Canada and reported to our audit committee. The audit of Q2 will happen during our annual audit for the year 2020. The period covered is the three months and six months ended June 30th, 2020. As a reminder, complete financial statements along with related management discussion and analysis can be found in the system for electronic document analysis and retrieval. The electronic filing system for the disclosure documents of issuers across Canada at www.sedar.com. All financial figures contained here and are expressed in U.S unless otherwise noted. Let me now turn this to our Chief Financial Officer, Dave Guebert. Please welcome Dave in his report of our Q2, 2020 earnings and subsequent events. Dave?

Dave Guebert: Thanks very much, Steve. I'll provide a brief summary of our June 30th financial statements, which were released on Friday. As a reminder, Steve mentioned all our figures are expressed in U.S. MindMed continues to build its capabilities and to expand its clinical, and research and development activities, our net loss for the three months ended June 30th, 2020 was $5.8 million made up primarily of research and development costs of $2.7 million, general and administrative expenses of $1.9 million; and share-based compensation which is a non-cash item of $1.3 million. For the six months ended June 30th, the net loss was $12.8 million comprised mainly of R&D of $4.5 million; G&A of $3.8 million and in share base comp of $1.7 million, as well as a listing expense which was related to the reverse takeover in February of $2.2 million, the majority of which was also non-cash expense. Research and development expenses for the six months ended June 30th comprised of consulting fees of $671,000, costs to acquire studies of $1.3. million; manufacturing and related costs of $898,000, clinical research and regulatory costs of $935,000, license fees of $500,000 and other R&D costs of $226,000. Research and development expenditures include all direct and indirect costs for these programs, compensation, licensing fees; for intellectual properties, as well as manufacturing, clinical and regulatory costs. General and administrative expenses for the six months ended June 30th consisted of compensation $1.7 million, legal fees of $261,000, accounting an audit of $128,000; marketing investor relations of $1million and $688,000 of other G&A. Turning to the balance sheet; our cash and funds and trust were $24.9 million at June 30th, and working capital was $23.4 million. Note that statements included a derivative liability of $641,000. This is the value of the financing warrants from the recent financing and under IFRS accounting this is classified as a liability because the warrants are priced in Canadian dollars, while our functional currency is in US dollars. The warrants will continue to be fair valued each period and any increase or decrease in value will be reflected as income or loss in the statement of operations. The net amount of financing during the six months ended June 30th was $28 million and cash used in operating activities was $10.7 million during the same period. With that I'll turn the presentation back to Steve.

Stephen Hurst: Thank you. Dave. That completes the formal part of today's presentation. JR and I will now address any questions that were raised during the call.

Operator: [Operator Instructions]

CollinGage: So, Steve, I think I have a good question here for you. I'm just going to read it out from Andrew [Delouse]. Andrew asks does MindMed have the goal of developing a line of products that provide therapeutic benefits without the psychedelic part of the experience. What if the psychedelic experience is integral to the therapeutic effects? Can you give more concrete information on how your products and compounds are being used in the current trials you are involved? Steve, maybe you want to address that to start with in the context of 18-MC.

StephenHurst: Well, let's take the broad question. This is an amazingly meaty question. And it's one that's occupied my mind for at least the last decade, and my colleagues in the psychedelic medicine community. And I have had many, many discussions about this particular issue. So the question is with respect to the use of psychedelic inspired medicines in the treatment of mental illness and addiction, is the hallucinatory component of a psychedelic inspired compound essential to the medicinal value of the compound. And this question started actually before I got involved in the 18-MC project with the finding that a non-hallucinogenic derivative of ibogaine in fact demonstrated significant and as good as if not better anti-addictive properties in animal models. And this is of course the foundational work of our scientific Co-Founder Stan Glick. His observation based on testing a hypothesis that he had was that he felt that it was possible that the anti-addictive properties of ibogaine were unrelated to the hallucinogenic experience. And he went on to test that in animal models, which ultimately has led us down the path with 18-MC, which is again an analog of ibogaine; it is not hallucinogenic, certainly nothing like the hallucinogenicity associated with ibogaine. And we still see in the animal models equal efficacy between ibogaine and 18-MC with respect to addiction treatment, if you will effectiveness against addiction in those animal models. There are other examples of non-hallucinogenic analogues of psychedelic compounds that demonstrate the same medicinal properties as the psychedelics without the hallucinogenic experience. And some of these compounds have had very limited testing in humans. So the great debate is hallucinogenicity essential to medicinal value? And my opinion and this is my opinion and one that we'll be working on for a long time is that some of the medicinal properties of psychedelics are not associated with hallucinogenicity. And in other situations hallucinogenicity is essential to the therapeutic value of the compounds. I don't really think it's going to be an either or situation. I think it's going to be a disease by disease, indication by indication. And to some extent patient by patient function. So I hope that answers the question and I apologize for how long the answer was.

CollinGage: Thanks Steve. We have a question for JR. It came from Nicholas. He asks will you guys ever be thinking of acquiring companies that use psilocybin.

JRRahn: It's a good question. I think we will continue to evaluate what is going to be best for the company as we assemble a tool set for both therapists and patients. And at the moment, we are not working in anything in psilocybin. There are many interesting companies that that are. There is many -- a lot of interesting research around psilocybin as well. So ultimately our goal as a company is to build the largest listed psychedelics company that can provide a benefit for patients. And in order to do that we'll need to have a diverse pipeline. So we will continue to evaluate companies that we feel are strong. And we will continue to evaluate clinical research that we feel to be strong. So we're not ruling it out; it's definitely a possibility.

CollinGage: Next question is from Aaron Rod. He asked with the company's multiple clinical trials and studies advancing, what kind of runway does the current $24 million cash position give MindMed?

JRRahn: Look, I think the question around runway constantly comes up as a clinical trial and drug development company. So right now if you just looked at our current burn rate based on where we've spent money over the last six months, it would equate to about a one year potential timeline on our existing cash. So, look, I think we're in a very good position as a company to have that type of both runway and capital that is in the company. We'll of course continue to evaluate new opportunities; and we will continue to evaluate what if our programs remain strong. And so we're very objective in determining what our budgets will be, and we'll definitely be making further disclosure around new budgets for next year, and we continue to evaluate that.

StephenHurst: Sarah can I add just a little bit of color on that because I think it's important. We've talked about it in the past, but I think it gets kind of lost in translation sometimes. So we've really ramped up the company very, very quickly. We have an extremely talented, extremely experienced group of people that are involved in the company now. We have a structure. We have multiple programs that are progressing in clinical trials, and we are now in a position to speak. And I have a lot of experience with this as we've talked about before. Multiple sources of non-diluted capital, and I think that we will continue along with raising capital through capital markets. We will also be looking to raise significant amounts of capital through non-dilutive means such as grants, corporate partnerships, development collaborations and the like. And I don't want us to lose perspective on that capability within MindMed. I think our experience in it is deep, and I think our probability of success is high.

CollinGage: Yes. I think it's a really good point, Steve, in terms of the ability of the pharma industry and also federal governments to fund a lot of the research that's going on here. These are problems that affect large swaths of society, and we need to find solutions for them. I think Bob has a good question that isn't in the Q&A section but it's relevant and Bob asks how much lobbying is done to push for rescheduling psychedelic medicine?

JRRahn: I think there are multiple efforts on going right now to look at how we turn psychedelics into medicines. There are also efforts that are looking at it from a different perspective, and maybe not from a medicinal standpoint or viewpoint. Our approach as a company has always been to look for ways that psychedelic substances can be turned into medicines to end suffering. And that will remain our focus as a company. We don't really do any lobbying at the moment. We are mainly focused on gathering data through rigorous science. That doesn't rule out that we won't do lobbying in the future. It's definitely something that Steve and I think a lot about. And but I think our role right now is to fund research, is to fund clinical trials and it's to build up really the infrastructure that's going to be needed to make these medicines part of a larger effort to deploy them into the healthcare system. Steve, is there anything you want to add on that given your experience down in Washington?

StephenHurst: Well, first of all, I'm very pleased as we talked about I think in our investor update that the attitudes with FDA are very supportive in terms of the work that we're doing. So from the regulatory side, we expect all of our projects to be viewed as any new medicines development project would be reviewed by FDA, which is obviously very, very good news. On the subject of rescheduling, I think that there's been a lot of, what would I say a great deal of effort to draw analogies between what's going on and what we're doing in psychedelics in terms of building this industry. And the history and the experience in the cannabis industry; but I just want to emphasize one thing. The power of the psychedelic is orders of magnitude greater than cannabis in terms of dissociation, altering the mind; opening the mind, having people become detached from their ego, detached from reality. These are not things that you see with cannabis. Cannabis is much closer to alcohol than it is to a psychedelic. I personally do not see the world going the same direction with psychedelics that it has gone with cannabis for the simple reason that you have to pay strict attention to set in setting when you're having an experiential dose of a psychedelic compound. If you don't do that you are taking inordinate risk with your health and safety, and the health and safety of others. I do not think the same could be said; perhaps some people would say, but I don't think the same can be said for cannabis. So we're going down this regulated path because we think it's absolutely essential to put the safety of people using psychedelic compounds first. And if they are particularly -- if they are seeking alleviation from suffering because of mental illness or addiction, those need to be carefully guided; and carefully orchestrated experiences in order to get positive results, especially since you're dealing with very vulnerable populations, that if they have an unsuccessful experience; it can put them into a, if you will, a new low in terms of their self-esteem and their hope or optimism for getting well in the future. So I do not see this going the way cannabis has gone at all.

Collin Gage: Thank you, Steve. Thank you to everyone coming out today. This concludes today's call. You may now disconnect.