Mind Medicine (MindMed) Inc

F:MMQ

Earnings Call Transcript 2022-Q2

[Operator]

Good afternoon and welcome to the Mind Medicine Second Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded.

It is now my pleasure to introduce your host Robert Barrow, Chief Executive Officer and Director at Mind Medicine. Mr. Barrow, you may begin your conference.

[Robert Barrow, Chief Executive Officer]

Thank you, operator and good afternoon everyone. Welcome to MindMed second quarter 2022 financial results and corporate update conference call. Following market close, we issued a press release with the summary of our results.

The press release reporting our financial results is available in the Investors and Media section of MindMed’s website and our quarterly report on Form 10-Q for the quarter ended June 30, 2022 will be filed today with the Securities and Exchange Commission.

Joining me on today’s call is Schond Greenway, our Chief Financial Officer, Dr. Miri Halperin Wernli, our Executive President and Dr. Daniel Karlin, our Chief Medical Officer. During the course of today’s, I will provide an overview and update on our business and Schond will review financial results for the quarter ended June 30, 2022 followed by Q&A.

For I began, let me remind you that during this conference call, we will be making Forward-Looking Statements. Company’s actual results may differ materially from those expressed and/or indicated by such Forward-Looking Statements. For description of risks, please refer to our quarterly and annual filings with the Securities and Exchange Commission.

Today, I will begin with an update on our corporate strategy. During the course of the quarter, we undertook a review of all of our assets, R&D programs and our overall business strategy. Based on this assessment, we were reaffirming our key near-term strategic priorities and are focusing our resources on advancing our MM-120 program in Psychiatric Education, specifically Generalized Anxiety Disorder and Attention Deficit Hyperactivity Disorder and our MM-402 program and Autism Spectrum Disorder.

We believe the enhanced focus of resources on these programs represents a cost effective approach to advancing the programs in are pipeline that have the highest probability to generate near-term value for our shareholders. We reflect spectrum MM-110 development program, which is a non-hallucinogenic congener of ibogaine.

In the second quarter we announced positive top line data from a Phase 1 placebo controlled study of MM-110 and 108 healthy volunteers. We previously stated that our goal for this program was initiated a Phase 2 trial and opioid withdrawal subject to our ongoing dialogue is and feedback from FDA.

Following a productive Type C meeting, we received feedback from the agency in which they requested Additional Preclinical Characterization of MM-110. That will now be required prior to initiating the proposed Phase 2a trial in the U.S.

We agree with the agency, as this information would be necessary to treat participants and our plan Phase 2a clinical trial with what we believe to be an adequate dose and duration. Given the time and cost that would be required based on these recent developments, we are reallocating our internal resources from this program to our other product candidates that we believe have a higher probability to generate near-term value for our shareholders.

In parallel, we are undertaking efforts to seek non-dilutive sources of capital and or collaborations with third-parties to address these non-critical hurdles and depending on interest would revisit Phase 2 clinical development program for MM-110.

We are also reducing the allocation of resources to other early stage research and development programs. Again, we believe these decisions are meaningful resources that will be reallocated for our highest priority programs, and extend our cash runway further into 2024.

We continue to progress these highest priority programs as expeditiously as possible, and believe our team has the capabilities and resources to execute a fastest-to-market strategy for MM-120 and MM-402.

Let me now provide some context and background for these decisions beginning with MM-120. MM-120 is our proprietary pharmaceutically optimized form of lysergic acid diethylamide, or LSD is being developed for the treatment of psychiatric disorders, including Generalized Anxiety Disorder, or GAD, and Attention Deficit Hyperactivity Disorder, or ADHD.

In May our collaborators at University Hospital Basel presented top line results from a Phase 2 placebo controlled investigator initiated clinical trial of LSD and the treatment of anxiety disorders at London’s PSYCH Symposium.

The results in 46 patients with clinically significant anxiety, demonstrated the significant rapid, durable and beneficial effects of LSD and its potential to safely mitigate symptoms anxiety and depression.

The study drug was well tolerated and then a dose of 200 micrograms resulted in significant and strong reductions of Global State-Trait Anxiety Inventory, or STAI-G 16-weeks after treatment in the between subjects analysis, with a statistically significant improvement from baseline compared to placebo.

We are encouraged by these positive data which reinforce decades of clinical evidence the potential therapeutic effects of LSD and anxiety and depression and further support our clinical development strategy and our enthusiasm for our MM-120 program and GAD.

Investigator enthusiasm for the science and for participation in our clinical program is strong. And we remain on track to dose our first patient in the Phase 2b Dosed Optimization trials and MM-120 of GAD during the third quarter with top line results from this study expected in late 2023.

Based on our team’s extensive expertise in the development of CNS drugs, and specifically psychedelics, we are confident that our clinical development plan represents the fastest path to market.

Our team remains highly motivated to execute this development program in the most efficient manner possible to minimize the lag time between stages of development and to demonstrate best-in-class execution of our development program.

As a reminder, our Phase 2b clinical trial is designed to enroll up to 200 participants who received a single administration of up to 200 micrograms of MM-120 or a placebo. The primary objectives and studies demonstrate reduction in anxiety symptoms for up to 12-weeks after a single administration of MM-120 across five treatment arms.

The initiation of this trial represents a major milestone, it builds on growing body of evidence that further underscores the therapeutic potential of MM-120. I believe this is just the beginning for MM-120 as we continue to advance our clinical development program, and deliver on our goal of generating the required clinical data to support the regulatory approval of MM-120 and GAD as efficiently and cost effectively as possible.

Our Phase 2a study of MM-120 in ADHD continues to progress with enrollment, and we remain on track to deliver top-line results in late 2023. We continue to believe in that broad therapeutic potential of MM-120.

Although over the near-term, we are prioritizing the clinical research of MM-120 in psychiatric disorders, and their appropriate time in the future we intend to continue to explore indications and other disease areas, such as chronic pain among others, as we seek to advance novel therapeutic approaches for patients with a wide range of brain health disorders.

I would now like to turn to our MM-402 or R-MDMA program, which is a synthetic enantiomer of MDMA that exhibits pro social activity and preclinical models. MM-402 is being developed for the treatment of core symptoms of Autism Spectrum Disorder, or ASD, which means the developmental disorder characterized by atypical social communication and interaction, repetitive patterns of behavior and restricted interests.

Preclinical studies and scientific literature to-date have continued to reinforce compelling data, providing strengthening evidence the potential of R-MDMA and its acute pro social effects. While it is reduced dopaminergic activity suggested it will exhibit a favorable safety and tolerability profile compared to racemic MDMA or the SN antimer.

Additionally, R-MDMA has been shown to maintain process to effects with reduced stimulant activity compared to MDMA and preclinical studies and we believe they have the potential to be administered in a standard dosing regimen. We expect to commence a sponsored phase one clinical trial of R-MDMA in 2023.

In addition to our collaboration with University Hospital Basel, we expect to initiate a comparative Phase 1 pharmacokinetics and pharmacodynamics trial of RS and recite MDMA and healthy volunteers in the third quarter of 2022.

Additionally, our external collaborations in early research and development activities has continued to progress, including the conclusion of the initial collaboration between MindMed and Nextage Therapeutic.

While we are reducing the allocation of resources to these early stage programs, we will continue to explore non diluted and self funding collaboration that will drive meaningful advancement of our early R&D pipeline.

I will now turn to our platform digital medicine products, which is strategically aligned with our drug development program, and has the potential to facilitate broad and diverse access to our product candidates.

Under our MindMed Session Monitoring System or MSMS platform, we have continued to advance our clinical studies and completion of data collection to evaluate sensory data during a consciousness-altering therapeutic session.

As a reminder, the MSMS platform is a technological product platform that provides the foundation for the development and implementation of a suite of regulated and unregulated products for use by clinicians and patients during treatment sessions that may also include the use of consciousness-altering medications.

Under our Anxiety Digital Diagnoses for Precision Psychiatry or ADDAPT program, we have continued to advance our clinical research with a study that is currently in private beta enrolling by invitation using a newly developed mobile application.

Finally, under are Quantifying the Processes and Events of Psychotherapy at Scale or QPEPS program. We have completed the data collection period of our clinical research study, and the study is entering an interim analysis stage.

Overall, we are extremely excited about these advancements and the value driving milestones ahead. With our enhanced focus on the MM-120 program in psychiatric disorders, and then MM-402 an ASD, we believe we will gain operational and capital efficiencies that represent a cost effective approach to bringing these products into late stage development with significant data readouts anticipated in the next 12-months to 18-months.

We believe our clinical development plans represent the fastest and most efficient path to bring our product candidates to market. And our lean and efficient team is poised to demonstrate our best-in-class execution of our core R&D programs.

On the leadership side, today, we announced and are pleased to welcome Dr. Suzanne Bruhn and Dr. Roger Crystal as new independent members of our Board of Directors. Sue and Roger both bring a valuable mix of public company Life Sciences experience and driving major fundraising efforts and developing and bringing innovative new products to market.

Their integrity, independence and experience will be invaluable as we advance through several key product development inflection points in the coming year, and we look forward to their immediate contribution to our Company’s success.

In connection with the addition of these two independent directors, Dr. Miri Halperin Wernli retired from her position as a Board Member. Miri has played an essential role in the strategic direction, execution and advancement of MindMed as both a valuable member of the Board of Directors and management team.

On behalf of the Board, we think Miri for her service on the board as she continues in her role as executive president, and wish she serves a key leadership role across all of the Company’s organizational and R&D initiatives.

I will now turn the call over to Schond Greenway, our CFO who will discuss our financial results. Schond.

[Schond Greenway, Chief Financial Officer]

Thanks, Rob. And thank you all for joining us today. We will now turn to our financial results for the second quarter ended June 30, 2022. Research and development expenses for the second quarter of 2022 were at $9.3 million, compared to $8.1 million for the same period in 2021.

The increase was primarily due to $2.8 million of external costs related to the MM-120 program and the commencement of R-MDMA study, and was offset by a decrease in external costs related to the completion of our 18-MC study from 2021.

General and administrative expenses were $7.6 million for the second quarter of 2022, compared to $37.1 million for the same period in 2021. The decrease was primarily due to $24.4 million in additional non-cash stock based compensation expenses related to the modification of stock option awards and restricted stock units. The net and comprehensive loss for the second quarter of 2022 was $17.1 million, compared to $44.5 million for the second quarter of 2021.

Our net cash used in operating activities was $28 million for the six-months ended June 30, 2022, compared to $21.2 million for the same period in 2021. As of June 30, 2022, our cash and cash equivalents were $105.7 million, compared to $133.5 million at December 31, 2021.

Our goal is to continue to be prudent with how we manage our cash and our expenses. And we believe that our cash and cash equivalents will be sufficient to meet our operating requirements beyond our key development milestone in 2023 and into 2024, which is well above 18-months of cash runway based on our current budget.

Finally, I wanted to mention that earlier in the month, the Board of Directors approved a ratio of one for 50 reverse share split of the Company’s common shares. The reverse share split is intended to enable us to achieve several important corporate objectives by providing greater flexibility and considering and planning for future potential business needs and to address the NASDAQ minimum price bid requirement.

To reverse share split is expected to take effect after the close of business on August 26, 2022 with the trading expected to begin on a split adjusted basis when the NASDAQ and the NEO Exchanges at market open on August 29, 2022.

I will turn the call back over to Rob, who will provide some closing comments. Rob.

[Robert Barrow, Chief Executive Officer]

Thank you Schond. As we have demonstrated, the second quarter was marked by steady progress across our development pipeline, but equally as important, we made some key decisions on our corporate strategy and focus that I believe will drive increased success and efficiency.

With a highly talented and committed team here at MindMed who have continued to execute this plan. Our near-term priorities are clear, advancing the ongoing clinical trials with MM-120 and GAD and ADHD, commencing our Phase 1 clinical trial for MM-402 and healthy volunteers in 2023.

And through our collaboration with UHB, initiating a Phase 1 comparative pharmacokinetics and pharmacodynamics trial of RS and racemic MDMA in healthy volunteers in the third quarter of 2022.

Finally, I want to note that we are aware of the letter issued earlier today by FCM and MM Holding. Unfortunately, FCM chose not to directly contact us about their views before issuing the letter.

That was disappointing because we are always open to feedback from our shareholders. Nevertheless, we will be receptive to engaging in a constructive dialogue with FCM, if they are interested.

We are still reviewing their letter and we are not trying to address on this call. Therefore, we ask that your questions will be going to do our second quarter updates and the progress of the business that we discussed today.

With that, I would like to thank you all again for being here today and happy to take any questions.

[Operator]

[Operator Instructions] We have a question from Charles Duncan with Cantor Fitzgerald. Please go ahead. Your line is now open.

[Charles Duncan, Cantor Fitzgerald]

Hi Rob and team congratulations on the progress and completion of that strategic review. And to Schond congrats on joining the MindMed Group. I had a couple of questions primarily on 120. I guess, I’m wondering if you could provide a little bit more color Rob, on the GAD study, nice to see that you plan to dose the first patient. But can you give us a little bit of sense of the number of clinical sites that you plan to initiate over the course of the near-term? And then whether or not those patients that you will be enrolling in the GAD study are experienced with LSD or not?

[Robert Barrow, Chief Executive Officer]

Yes, thanks so much for the question Charles. In terms of the clinical design for MM-120 and GAD, as you know we are conducting a five arm parallel clinical trial on this indication. And we have 200 patients across an entire study. We are enrolling at 20 sites here in the U.S. as our target number of sites.

And we anticipate to get many of those sites on line in the very near-term, given some of the controlled substances requirements to activate clinical sites, using a schedule one controlled substance in clinical research studies that can vary by jurisdiction by state and by the local DEA office. But we have been working feverishly in the background with each of the sites to get their applications together and anticipate getting many of the sites online and very near-term.

[Charles Duncan, Cantor Fitzgerald]

Okay. And then I think you used the words up to 200 patients to be enrolled in that study. I may have missed heard that. But if I did hear it correctly, could you let us know what would determine the total sample size, the final sample size?

[Robert Barrow, Chief Executive Officer]

Yes. The target sample size is 200 patients. Obviously, there is some final variance that is possible in those numbers, plus or minus a few patients simply based on the end of the study enrollment, but we are targeting and anticipate enrolling the full 200 patients to that study.

[Operator]

Our next question is from the line of Elemer Piros with ROTH Capital Partners. Please go ahead. Your line is now open.

[Elemer Piros, ROTH Capital Partners]

Yes, hi. Rob, just one question on the anticipated 20 site. I saw one of them is listed on clinicaltrials.gov. Is there any more? Is there may be a delay with the listing on that website or they are coming on as we speak so they are just not in the system yet?

[Robert Barrow, Chief Executive Officer]

Absolutely. There is no delay, all sites are coming online and it is just a matter of when those sites are posted on clinical trials.gov.

[Elemer Piros, ROTH Capital Partners]

Okay. And could you please also just a little bit elaborate on your decision not to directly invest in MM-110 at this stage. What brought that decision or what precipitated that decision, if you wouldn’t mind?

[Robert Barrow, Chief Executive Officer]

Absolutely, as I mentioned, we had a productive engagement with FDA, we were exploring opportunities to pursue that program in a number of jurisdictions. But as we previously announced, we were intent on advancing that program into Phase 2 subject to those discussions with FDA.

Based on those discussions, it was clear that we needed to do additional non-clinical research in order to support an adequate dose and duration in the treatment of opioid withdrawal and therefore decided that the time and cost requirements to bring that product forward at this time needed to be allocated to our other programs. We of course see the value and potential in this program and at the appropriate time in the future will be evaluated moving forward into a Phase 2 program.

[Operator]

Our next question is from Patrick Trucchio with H.C. Wainwright. Please go ahead. Your line is now open.

[Patrick Trucchio, H.C. Wainwright]

Thanks. Good afternoon. Just a couple of follow-up questions for me. I guess just the first one if you could remind us in the LSD phase, Phase 2b trial. What are the doses that are going to be evaluated of LSD and with the low dose or would a sub perceptual dose be expected to act as a control in this in this trial?

[Robert Barrow, Chief Executive Officer]

Yes, thanks so much, Patrick. So the doses we are testing, in addition to a placebo are 25 micrograms, 50 micrograms, 100 micrograms, and 200 micrograms of LSD. Those correspond to different levels of perceptual activity after acute administration of LSD.

One of the great things about the studies that will enable us to do post hoc paralysis comparisons between each of those dose levels. One of the things we feel has been inadequately explored with the psychedelics is the dose responsiveness both acutely and in terms of durability of effects across this dose range.

So we will certainly be looking at the potential of all of these doses to impart either rapid or prolonged clinical benefit. But we will also be looking at the comparison between goes the dose such as 25 milligrams, excuse me, 25 micrograms, compared to the 200 microgram, or 100 microgram dose to determine if there are differences in terms of placebo response, or functional unblinding between those doses.

[Patrick Trucchio, H.C. Wainwright]

And then as well, in this Phase 1b trial. Can you talk about are there any requests or is there anything from the regulators on the safety and tolerability side, that you would need to be generated or that you would be looking for beyond kind of what we would normally like to see in a Phase 2b trial? And what would you need to see from kind of an efficacy and safety perspective to give confidence to move this program forward to Phase 3?

[Robert Barrow, Chief Executive Officer]

In terms of safety endpoints, they are largely aligned with both what you would expect from any CNS active molecule that is in Phase 2 development. There is, obviously with LSD, there is a history of clinical research and where there are any observations from historical literature. We certainly pay special attention there.

But there is nothing that would stand out as particularly unique or not ordinary about the safety and points we are studying in the trial. And your second part of the question, I believe. Do you mind repeating the second part of the question?

[Patrick Trucchio, H.C. Wainwright]

Just in terms of the improvements that you’re looking for on the primary endpoint, and kind of what would give you confidence to kind of move this program forward to Phase 3? Would you be looking for kind of what was just demonstrated in the UHB trial or kind of similar outcome as well as kind of a clear kind of dose response or what would you want to see here from efficacy as well as safety move forward to Phase 3?

[Robert Barrow, Chief Executive Officer]

We have not getting guidance on the specific cut off or for what we’d anticipated to move forward. Certainly, we would anticipate and expect and would want to see a dose response compared from top doses or from any of the doses to a placebo. So we are certainly looking for a clinical response in this study. And obviously, we are always shooting to have a statistically and clinically significant result.

Based on the results from the UHB study and from historical literature, we are quite confident that that outcome is going to be achieved and certainly we will analyze those data and try to path forward based on the outcomes and study.

[Operator]

Our next question is from Sepehr Manochehry with Eight Capital. Please go ahead. Your line is now open.

[Sepehr Manochehry, Eight Capital]

My first question is on the some new program you guys have as your focus. I understand there is a Phase 2a happening for MM-120 that started in December, with this kind of two arms, I think 26 patients per arm. Do you have visibility on where that enrollment is and I guess what that cadence has been like as it picked up in the last couple months and just give us a little bit of insight into that.

[Robert Barrow, Chief Executive Officer]

Yes, enrollment has progressed according to plan, and we remain on track to have a readout and the later part of 2023 in that study. We don’t typically announce enrollment figures for any of our clinical studies along the way while they are in progress, but certainly believe at this stage that everything is on track for that property now, please guide into the second half of next year.

[Sepehr Manochehry, Eight Capital]

So that is kind of past that startup phase and has started to dose patience, like I just kind of distinguishing from the GAD study, which is right now on the ramp up before dosing, like can you give us insight into what the lead in time was before dosing and that study, and if that is informative for this one?

[Robert Barrow, Chief Executive Officer]

Yes, they are quite different study design, in different patient population. So we said to them is somewhat discrete in terms of how we approach it. That study is actively dosing patients and his ongoing.

[Sepehr Manochehry, Eight Capital]

Okay. Well, that is great to hear and, obviously, it’s great to see the cost reduction and the forward looking cost reduction efforts. When you guys talk about non dilutive funding, do you have insight and have you gotten out of line of sight into opportunities or whether it is co-development partnerships or government grants? I understand, I believe National Institute of Health Research has us funded some programs that align with kind of MM-110 program. Can you kind of touch on that?

[Robert Barrow, Chief Executive Officer]

Yes, we are open to exploring all non diluted sources of capital. And we will be exploring those as we progress here. We certainly are aren’t in position today to say that we have one that we are going to be advancing with, but we keep our options open to us. And we will continue to explore them to chart a path forward for that program.

[Operator]

And we have a follow-up question from Charles Duncan with Cantor Fitzgerald.

[Charles Duncan, Cantor Fitzgerald]

Hi Rob, thanks for taking the follow-up. I wanted to ask you about 402 program that we haven’t talked much about on this call so far. Intrigued with that, I guess I’m wondering if you can provide us a little bit of color on the IP behind it, as well as in terms of I think you mentioned a study looking at R and then S and then also receive back and I’m wondering what you anticipate being able to learn from that study?

[Robert Barrow, Chief Executive Officer]

Yes, thanks so much, Charles. We are very excited about this program and the potential as you know, there are no available therapies in the treatment of the core symptoms of Autism Spectrum Disorder.

And so, this would really represent a first-in-class position for ultimate successful in the approval of this program. In terms of the study that will be starting very soon. It is as you said, they compare this PK PD study between the two enhancements of MD&A and racemic mixture.

One of the things we are particularly interested in is observing the on drug prosocial and perceptual effects. MD&A is not a serotonergic psychedelics such as LSD, so obviously more serotonergic activity with the aren’t antemer. But to observe functionally and subjectively what patients experiences on the drug.

While autism is certainly a disorder that is defined in the DSM, we believe that the ongoing effects that would be present in normal healthy volunteers may have carryover effects that would give us confidence to move forward in the ASD population. So we are certainly very keen on understanding the pharmacodynamic and subjective effects of our R-MDMA in a treatment session.

In terms of intellectual property, we have filed and will continue to file patents across our entire portfolio. We feel quite confident in our strategic approach both with patent and non-patent intellectual property protection. And as those applications are further prosecuted and become published, we will certainly be happy to talk further about them and where we see the clients.

[Charles Duncan, Cantor Fitzgerald]

Okay. And can I assume that you will be conducting those studies in adults? First and then do you have any plans to consider rare neurodevelopmental disorders in which ASD is a prominent symptom in adults or even younger people? I suppose that is a stretch.

[Robert Barrow, Chief Executive Officer]

As we certainly do anticipate to begin our clinical research program in adults, but this is a disease that is developmental and is diagnosed in early childhood. So over the longer term, we so certainly have a path charted where we anticipate moving into pediatric indications if the data supported ultimately.

We keep our minds open as well to subtypes of any of the diseases. And if there are rare pediatric or rare adult diseases that would align with the prominence of any of these symptoms or Autism Spectrum Disorder in itself, we would certainly take every opportunity to explore that as part of the development program at some point.

[Charles Duncan, Cantor Fitzgerald]

Okay, very good. Thanks for taking the follow-up.

[Robert Barrow, Chief Executive Officer]

Absolutely. Thanks so much.

[Operator]

And I believe that is all the time we have for questions today. That concludes the Q&A portion of the call. I will now turn the call back over to MindMed’s CEO Rob Barrow for closing remarks. Rob.

[Robert Barrow, Chief Executive Officer]

Thank you, operator and thank you everyone who joined us this afternoon. Before we conclude today’s call. I would also like to thank the entire MindMed team, our investors into the many people who have been supportive along the way, including our study participants and their families.

[Operator]

That concludes the call for today. We thank you for your participation asked that you please disconnect your line.