Mind Medicine (MindMed) Inc

F:MMQ

Earnings Call Transcript 2019-Q4

[Operator]

Good morning. My name is Marcella, and I will be your conference operator today. Welcome to MindMed's 2019 Year-end Results and Corporate Update Investor Call. Leading the call today will be MindMed's, Co-CEOs, J.R. Rahn and Stephen Hurst. Please direct any questions you may have by e-mail to [e-mail], and they will be addressed after the formal part of the call. Steve, you may begin the conference.

[Stephen L. Hurst, executive]

Thanks very much for the introduction, and good morning. Welcome to the first earnings call for MindMed as we continue our mission to discover, develop and deploy psychedelic inspired medicines to alleviate suffering and promote health.

Before we start the call, I'd like to ensure that all listeners are aware that questions for management need to be sent by e-mail to [e-mail]. We appreciate everyone taking the time today to join our call, especially in these rather extraordinary and trying times. I'm Steve Hurst, the Executive Chair and Co-CEO, and I'm joined today by my Co-Founder and Co-CEO, J.R. Rahn. Our Chief Operating Officer, Carol Nast, to Dave Guebert, our newly-appointed Chief Financial Officer; Peter Volk, our Corporate Counsel; and Paul Van Damme, our outgoing CFO, who will lead the discussion of our 2019 year-end earnings report. Also, I'd like to draw your attention to the fact that this 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 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 maximum of 1 hour for this call. I will now turn the call over to our Co-CEO, J. R. Rahn.

[Jamon Alexander Rahn, executive]

Thank you, Steve, and my thanks to all of you for joining us today. I personally would like to start by hoping that everyone is doing well at this very trying time. While we will discuss the results of the past quarter, the COVID-19 crisis only highlights the importance of the work that we are doing at MindMed. We predict that there will be a monumental mental health crisis coming out of this pandemic and the need for the disruptive technologies that MindMed is developing for both addiction and other mental illnesses will be needed now more than ever. I would also like to highlight that due to the global nature of drug development, MindMed relies on a globally distributed team of employees, consultants and vendors and has a strong business continuity plan around COVID-19. The company was built to function in a geographically distributed monitor every day on Zoom due to our global operations. And we set this up long before COVID-19. Because of this decision, MindMed work has continued uninterrupted and will pay dividends and efficiency in the months ahead.

Now for the fiscal period ended December 31, this period marked a pivotal time for MindMed as we built the team and infrastructure needed to develop medicines based on psychedelics. We have achieved key milestones across our business, positioning MindMed as a leading neuropharmaceutical company for psychedelic medicines. As we grow our clinical trial pipeline and enter new markets, it is important that MindMed does not change its objective to build a comprehensive platform to the development of Medicines based on psychedelic substances through rigorous science and clinical trials. We seek to transform these once stigmatized substances into IP-protected, federal-approved medicines. We are passionate about using our medicines to solve the enormous economic loss in the United States through the mental health, addiction and potentially other unmet medical needs. All of our drug development programs will employ best-in-class practices and be in strict compliance with drug development, regulatory and supervisory bodies such as the FDA. The year just ended was a milestone period for IT developments and acquisitions. MindMed continued the development of its 18-MC drug development program. And due to the work by our team, we began recruitment last week on further human safety studies for 18-MC. The program is tentatively scheduled to be in its Phase II trial of 18-MC by the end of 2020.

Also in the same period, MindMed establishing industry-leading psychedelics microdosing division. We see great promise in the non-hallucinogenic, sub-perceptual dosing of psychedelics. I will seek the leadership role in the microdosing space through unique IP and clinical trials. This division has begun preparing a Phase II trial for the microdosing of LSD. The goal is to safely and effectively mitigate the nation's growing use of stimulant-based medicines to treat ADHD in the United States.

Additionally, MindMed added necessary infrastructure in its unique drug development platform for discovering, developing and deploying phychedelic-inspired medicines. This was achieved through the recruitment of a leading team of pharmaceutical industry veterans, academics and advisers.

Recently, many of you may have seen that Johns Hopkins Professor and leading psychedelic researcher, Matt Johnson, joined MindMed as an adviser.

In addition, we have added pharma veteran and psychiatrist, Dr. Miriam Halperin Wernli, to our Board and as a clinical adviser. Dr. Halperin Wernli previously worked at Roche and Actelion in drug development roles. Each member brings deep experience in neuropharmaceuticals. With that in mind, we are saddened to have announce the retirement of Paul Van Damme as Chief Financial Officer. I want to thank Mr. Van Damme to his service to MindMed and his invaluable contributions in helping us with all listing on the NEO exchange. We wish him well in future endeavors on in his retirement.

In the meantime, we are pleased to welcome our Interim Chief Financial Officer, David Guebert. David brings extensive experience and will be an excellent team member.

Finally, I want to take a moment to address where we started, the COVID-19 developments and the pertinence to MindMed. As a company and as a team, we are financially, mentally and professionally secure. We will not only make it through the storm, but we believe we will help to position mental health in a new way so that people can thrive after this process ends.

With that said, I also want to discuss our latest news in IP, acquisitions and our drug development pipeline.

MindMed will leverage and develop its existing intellectual property involved in treating opioid use disorders. In particular, I want to address the 18-MC molecule, which is a synthetic [ carbomer ] of the ibogaine plant. This, in particular, has been proven effective for treating addictions in animals. In early tests, 18-MC appears ibogaine use anti-addictive properties while eliminating the downsides of ibogaine use, including cardiac toxicity.

Most importantly, 18-MC is not labeled as a schedule one substance and is non-hallucinogenic.

Pertaining to 18-MC and more broadly, I want to take a moment to highlight our strategic acquisition approach. Following the acquisition of 18-MC, MindMed filed a U.S. provisional patent application, encompassing the intellectual property that was previously held to trade secrets. This application covers extensive data on 18-MC in humans, including surprising results relating to absorption and metabolism in humans and human pharmacokinetic activity.

For the time being, MindMed maintains most of its intellectual property generated by its R&D programs as trade secrets. We anticipate, though, that as these programs mature, patent applications will be filed. Court appeals about these programs will be available following our filings as our competitive strategy allows for. With that said, I want to further explain how 18-MC works. 18-MC is designed to treat addiction as a brand new disease. It does so by keeping governing levels within a normal range, which regulates associated highs. This then regulates cravings and addiction. Current treatment for opioid use disorder have not proven to be effective. If the 18-MC -- if 18-MC ultimately is pretty successful in opioid use disorder, it could have potential to treat other use disorders.

Active physicians might led to sort of addiction markets in alcohol, tobacco, cocaine and methamphetamine markets -- addiction markets. These additional markets may create an exponential revenue opportunity for MindMed while potentially solving some very large problems that were -- at the United States and parts of Europe.

Next, let's discuss our exciting microdosing program, which involves significant advancements in LSD treatment. It's important to note the program is based on sub-perceptual amounts of LSD. We believe this will be the first Phase II microdosing trial for adult ADHD, a tradition that affects an estimated 10 million people in the U.S.A. alone. We are enthused to address the substantial market opportunity will bring us safe and effective solution for the masses.

Further on the line, MindMed is developing intellectual property that will enable LSD and silicide in microdoses to be taken home and prescribed by a local physician. As always, this will be developed by conducting FDA clinical trials under rigorous scientific conditions, thereby enabling a clear regulatory pathway for the development and production of the treatments. This would be a novel treatment in the ADHD market currently dominated by stimulants.

With these new advancements, it is an appropriate time to note that we have created a technology evaluation, acquisition and scientific integrity board committee to identify and expand the company's clinical trial pipeline and IP portfolio of psychedelics.

MindMed takes an active approach to process and evaluate opportunities through rigorously diligence. This helps the company determine if such assets would make a compelling addition to our drug development platforms and programs. I would like to end the highlights of our strategic acquisitions with our most significant enhancement to build as a company. MindMed is extremely proud and excited to have announced today the pivotal acquisition of the world's largest collection of previous and ongoing clinical trials for LSD and a research partnership with the world's leading research lab for LSD at the University Hospital Basel in Basel, Switzerland. Basel is where Albert HoffMan invented LSD over 80 years ago while working at Sandoz Laboratories, now a part of the pharmaceutical group, Novartis. Our goal is to complete Albert's legacy and turn LSD into an FDA-approved medicine one day.

The Liechti Lab and research team is led by Professor -- Dr. Matthias Liecht. Dr. Liecht has done -- studying the pharmacology and potential medical uses of LSD and other psychedelics for many years.

These studies have been conducted both in patients and healthy volunteers over a 10-year period.

Now giving MindMed a significant head start and leading position in the LSD space.

The multiyear deal gives MindMed access to the largest selection of Liechti Labs, previous clinical trials and know-how for LSD psychedelic research but also enables us to access future psychedelic research that Dr. Liecht and his team complete.

MindMed gains an unprecedented pipeline of future clinical trial potential from this acquisition. This acquisition cements -- this acquisition and partnerships announced MindMed as an industry-leading neuro-pharmaceuticals company for psychedelic medicines.

MindMed is particularly interested in the data and outcome of an ongoing placebo-controlled Phase II trial of high-dose LSD for the treatment of anxiety. The active arm of the Phase II trial is evaluating 2 single dose administrations at SLD for the treatment of persons suffering from anxiety symptoms.

MindMed is currently examining the creation of a drug development program using hallucinogenic doses of LSD for the treatment of anxiety disorders.

Under the terms of deal, MindMed will support current and future clinical trials under the guidance of Dr. Liecht. Dr. Liecht will also support MindMed's plan microdosing study of LSD as a potential treatment for adult ADHD.

Additionally, Dr. Liecht primarily responsibility for development of receptive compounds. MindMed will provide research funding and milestone payments.

In return, MindMed will receive the exclusive license to existing and future data and IP generated from these clinical trials. The University of Hospital Basel will receive royalties and development revenue on any products marketed through the collaboration. Through this partnership, we have discovered a rare blue style opportunity to advance LSD as a medicine based on significant data and experience found in Basel, Switzerland. This is a critical step in securing MindMed's position as the foremost company developing LSD and the right compounds for neurological and psychiatric disorders. We hope to shepherd LSD in a responsible manner and turn Albert Hoffman's problem trials into a wonder drug through an FDA pathway. With that said, I would like to transfer the call back to our CEO and Chairman, and my co-Founder, Steve Hurst.

[Stephen L. Hurst, executive]

Thanks, J.R. Certainly appreciate that update for everyone. MindMed is very privileged to be collaborating with the University Hospital Basel and Dr. Liecht and to play a small role in the legacy of Dr. Albert Hoffman, which began in Basel over 80 years ago.

Now with that, we turn to our earnings report. Our 2019 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 and approved the report on May 30, 2019. The period covered is May 30, 2019 the date of incorporation of MindMed Delaware through December 31, 2019. All financial figures contained herein are expressed in U.S. dollars, unless otherwise noted.

I would now like to transfer the call to Paul Van Damme and echo J.R.'s sentiments and thanking Paul for all his incredible hard work for the last 9 months to get us where we are right now. Again, please welcome Paul Van Damme and his report on our 2019 and subsequent events. Paul?

[Paul J. Van Damme, executive]

Thanks very much, Steve. Since inception of MindMed barely 10 months ago on May 30, 2019, we've incurred losses from operations while advancing the research and development of our products into the clinic. Our net loss for the period ended December 31, 2019, was $5,474,000. The net loss was due primarily to management compensation of $1,173,000 and legal fees of $1,045,000. All amounts, as Steve mentioned, are in U.S. dollars.

Research and development expenses by program for the period ended December 31 consisted of $645,000 for the 18-MC program, $863,000 for our LSD program and $540,000 for non-program-specific costs for a total of $2,049,000. Research and development expenditures include all direct and indirect costs for the programs, compensation, licensing fees for intellectual property, as well as manufacturing, clinical and regulatory costs. General and administrative expenses for the period ended December 31 were $3,105,000 and consisted of compensation, legal fees, accounting and audit, marketing and travel and primarily related to the establishment of MindMed and its operations, the acquisition of 18-MC and related activities. Turning to our balance sheet. Our cash and funds and trust were $6,702,000, and our working capital was $4,775,000 at December 31. These amounts were due to the $9,902,000 of net financings completed in 2019 at successively higher per share amounts. Cash used in operating activities of $3,200,000 for the period ended December 31 was mainly due to the net loss of $5,474,000 partially offset by an increase in accounts payable and accrued liabilities of $1,961,000.

Subsequent to the year-end, we were successful in raising an additional $19,583,000, concurrent with the completion of our reverse takeover and the commencement of trading as a public company on the NEO exchange on March 3, 2020. With that, I'll turn the presentation back to Steve.

[Stephen L. Hurst, executive]

Thank you, Paul. Much appreciated. Given the rapidly changing COVID-19 global crisis and the events of the past month, I'd like to ask our Chief Operating Officer, Carol Nast, to comment on the impact of COVID-19 on MindMed's operations and the team's response. Carol?

[Carol Nast, executive]

Thank you, Steve. MindMed is actively engaged in developing our response to COVID-19 global pandemic. Our focus in addressing the challenges is to effectively mitigate the emerging risk to our programs. We're actively engaged with all our partners and suppliers and are in the process of developing and implementing approaches that address the current and potential impacts to our plans during this time of rapid change and uncertainty.

We're also reviewing and updating our operational strategies to ensure that we anticipate ongoing global changes to our industry that result from the pandemic.

[Stephen L. Hurst, executive]

Carol, thank you very much. Appreciate that. And that completes the formal part of the presentation. J.R. and I will now address any questions that we've received during the call.

[Stephen L. Hurst, executive]

And I am looking at -- excuse me, I'm off script, and this is extemporaneous. I am looking at a question.

The first question that we have is, when do you think the trials will be done? So your product could hit market and start bringing in revenue. Also, are there any plans to look for strategic partnerships with other companies?

Let me answer the second part of the question first. We tend to take certainly a strategic and tactical approach in terms of collaborations and partnerships, but we're also opportunistic. And one of the things that is great about an organization like MindMed is we're very nimble, and we can act very quickly. The establishment of the Board committee to evaluate potential collaborations and acquisitions, it gives us an open door to the Board and an opportunity get very rapid Board action with respect to any such opportunities.

So the short answer is, we definitely will be looking at opportunities to collaborate with other companies, looking at acquisition opportunities on an ongoing basis. And we look forward to growing our technical arc, as we like to call it, in terms of the population of our platform.

With respect to clinical trials and predicting the outcomes of clinical trials, always a little bit reticent to give specific numbers. What I can tell you is, is that the earliest opportunity that we would see to evaluate data on 18-MC in opioid patients that could potentially lead to an early approval by FDA is sometime in late 2021 or 2022 is when we would expect to be looking at the first efficacy data in a small sample of patients. It is not unprecedented for FDA in the face of a critical need to allow a product to proceed to market on very preliminary data with a requirement for subsequent Phase IV clinical trials to confirm the efficacy and safety of the drug in a larger population of patients. I do not expect us to have that early opportunity present itself. But if it does, I can assure you, we will take full advantage of it.

And I don't see any other questions at the moment. So anything else, J.R., that you'd like to comment on before we close the meeting today?

[Jamon Alexander Rahn, executive]

No. I think that covers it. I'm particularly excited about our Basel collaboration and establishing a leadership position in the LSD space. And I think that's a very relevant topic, too.

[Stephen L. Hurst, executive]

Well, I think J.R. should be rightfully excited, and he also should be very proud and I'm sure he is of that work. He worked very, very hard to bring that collaboration to Mind Medicine and our Chief Medical Officer, Scott Freeman, was also very heavily involved in bringing that transaction along, and we're very grateful for all of their efforts. And with that, I think we're going to close. So we've run out of time. Basically, we've run out of questions. And as always, should you have questions, please feel free to send them to [e-mail] or [e-mail], and everyone, please stay safe. Operator, over to you.

[Operator]

This concludes today's conference call. You may now disconnect.