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Compass Pathways Plc (CMPS -23.10%)
Q3 2024 Earnings Call
Oct 31, 2024, 8:00 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Thank you for joining today’s conference call. My name is Louella, and I will be your operator for this session. I would like to welcome everyone to the COMPASS Pathways third-quarter 2024 earnings call. [Operator instructions] I will now turn the call over to Steve Schultz, Senior Vice President of Investor Relations.
Please proceed.
Steve Schultz — Senior Vice President, Investor Relations
Thank you, and welcome to our conference call regarding the third-quarter 2024 results. I’m joined by Kabir Nath, our CEO; Lori Englebert, our Chief Commercial Officer; and Teri Loxam, our Chief Financial Officer. They will provide their insights into the quarter’s performance. We also have Dr. Guy Goodwin, our Chief Medical Officer, and Dr. Michael Gold, our Chief R&D Officer, available for the Q&A portion. This call is being recorded and will be accessible via our Investor Relations website for 30 days following the call. I would like to remind everyone that we will be making forward-looking statements as outlined in our SEC filings. Please be advised that actual results could differ due to various risks and uncertainties.
I will now hand the call over to Kabir Nath.
Kabir Nath — Chief Executive Officer
Thanks, Steve. Hello everyone, and thank you for being with us. I would like to acknowledge Lori Englebert, who is joining us for her first quarterly call. We are excited to have her enhance our executive team with her significant experience, particularly in launching products. She will provide insights on our commercial strategy shortly, and Teri will follow with a financial update.
Let me first address the timeline concerning our pivotal COMP360 trials. We previously anticipated disclosing data from our COMP005 trial within six weeks, but that timeline has shifted. Based on current recruitment rates, we are now targeting a data readout for the second quarter of 2025. Our primary focus remains on completing our Phase 3 trials successfully and efficiently.
Michael Gold has been actively engaging with trial sites to understand the challenges better and refine our approach. Conducting large-scale psychedelic trials presents complexities, and we’ve recognized the differences between our Phase 2b and Phase 3 protocols. While the Phase 2b trial followed a simpler structure, the ongoing COMP005 trial involves 52 weeks and is double-blinded, requiring careful management of patient flow. We are committed to supporting our sites and refining our processes to facilitate effective recruitment and minimize patient dropouts.
We are currently focused on maintaining strong interest from potential patients while ensuring our sites are equipped to expedite the clinical process. As we prepare for the data release, please note that while we will disclose some efficacy measures at six weeks, the trial remains ongoing, and we must maintain blinding to uphold the integrity of our findings.
Now, regarding our second Phase 3 trial, COMP006, it includes multiple dosing arms and mirrors the structure of 005, emphasizing the importance of continued blinding to ensure robust data. We believe these efforts will provide significant insights for both regulatory and commercial purposes. Based on the experiences from our ongoing trials, we are actively exploring ways to enhance enrollment, and we anticipate data from COMP006 in the latter half of 2026.
As we enhance our regulatory strategy, our efforts on the commercial front are equally vital. I will now turn it over to Lori to elaborate on our preparations and insights in this area.
Lori Englebert — Chief Commercial Officer
Thank you, Kabir. I’m honored to be part of a team that is dedicated to addressing treatment-resistant depression (TRD). This patient population has significant unmet needs, and with current treatment options being limited, the potential of COMP360 is immense. During my time at COMPASS, I’ve seen our proactive efforts in commercial strategy—collaborating with treatment centers, ensuring appropriate billing practices, and preparing for conversations with payers.
Our partnerships with interventional psychiatry networks are invaluable for understanding the current healthcare landscape and optimizing delivery models for COMP360. We believe that by learning from these collaborations, we can effectively integrate COMP360 into existing infrastructures while meeting potentially high patient demand.
As we engage with healthcare professionals, enthusiasm for COMP360 is notable. Preparing the market will require focused education on TRD and cultivating the necessary referrals to treatment centers. We are working diligently to address these needs ahead of product launch.
Next, I will pass the call to Teri for a financial overview.
Teri Loxam — Chief Financial Officer
Thank you, Lori. During the third quarter, we reported cash usage of $22.2 million, which includes the R&D tax credit of $13.6 million that positively affected our cash flow this quarter. Excluding this, operational cash used remained at the midpoint of our previously projected range. For the fourth quarter of 2024, we expect cash usage to increase to $37 million to $43 million, bringing our total expectation for 2024 to between $114 million and $120 million.
As of September 30, 2024,our cash reserves totaled $207 million compared to $228.6 million as of June 30, 2024. To optimize cash preservation while we continue our Phase 3 trials, we are implementing workforce reductions and halting preclinical efforts unrelated to COMP360, aiming for a downsizing of approximately 30%. These measures are essential for ensuring that our cash runway extends into 2026.
I’ll now pass the call back to Kabir.
Kabir Nath — Chief Executive Officer
Thank you, Teri and Lori. We are committed to leveraging our resources to expedite our clinical trials while maintaining high standards for regulatory and commercial success. We are continually assessing strategies to enhance the progress of COMP360 and uphold our commitment to patient needs.
Thank you for your time, and we welcome your questions.
Questions & Answers:
Operator
[Operator instructions] Your first question comes from Ritu Baral with TD Cowen. Please go ahead.
Unknown Speaker — — Analyst
Hi, this is Athena on for Ritu. Was your decision to move the top-line readout made after additional FDA correspondence? And do you foresee any other operational changes?
Kabir Nath — Chief Executive Officer
Thanks, Athena. The decision regarding the readout was internal, driven by caution based on the situation experienced during the Lykos process. We are actively exploring all options to expedite the conduct of 006.
Unknown Speaker — — Analyst
Understood. Thank you.
Operator
Your next question comes from Leonid Timashev with RBC. Please go ahead.
Leonid Timashev — RBC Capital Markets — Analyst
Hi, thanks for taking my question. Can you explain how the complexities in trial recruitment could affect the real-world application of COMP360? Is there concern about adequate staffing and patient scheduling once the product is commercialized?
Kabir Nath — Chief Executive Officer
That’s an important inquiry. Understanding that clinical trial settings differ significantly from commercial environments is key. Lori can elaborate further on our approach to ensure smooth operations moving forward.
Lori Englebert — Chief Commercial Officer
Thank you, Leonid. The commercial landscape will build upon what we are learning from current trials while considering physician education and treatment site capacities. We aim to refine patient flow to maximize treatment efficiencies and currently see positive growth after the introduction of products like Spravato, indicating that facilities will adapt to increased demand.
Operator
Your next question comes from Charles Duncan with Cantor. Please go ahead.
Charles Duncan — Analyst
Good morning. While I’m disappointed by the timeline shifts, I appreciate your commitment to maintaining robust clinical evaluation. Can you explain if the changes correspond to any FDA guidance regarding data disclosures?
Kabir Nath — Chief Executive Officer
No changes have arisen in our regulatory strategy. The alteration relates to data release timing, but our core expectations for both trials remain intact.
Charles Duncan — Analyst
Last question on enrollment patterns; how does medication washout factor into patient recruitment?
Michael Gold — Chief Research and Development Officer
Currently, we experience over 90% successful washout rates. It’s essential to ensure investigators understand the importance of this procedure to mitigate any misconceptions among patients.
Operator
Your next question comes from Elemer Piros with Rodman. Please go ahead.
Elemer Piros — Analyst
Can you clarify the retreatment eligibility criteria and how it relates to patients on antidepressants?
Kabir Nath — Chief Executive Officer
Every patient that resumes antidepressants can still qualify for retreatment based on the MADRS thresholds we established.
Operator
Our next question comes from Patrick Trucchio with H.C. Wainwright and Co. Please proceed.
Patrick Trucchio — Analyst
Do you expect to require data from both COMP005 and 006 to submit your NDA? Furthermore, could you elaborate on the expected advisory committee evaluations for COMP360?
Kabir Nath — Chief Executive Officer
Yes, we still require data from both trials, and we fully expect an advisory committee will review the product due to its Class I designation.
Operator
As there are no further questions, I will turn the call back to management for closing remarks.
Kabir Nath — Chief Executive Officer
Thank you for your participation in today’s call. We sincerely apologize for any technical disruptions. Our focus continues to be on executing our pivotal trials while ensuring the timely and effective delivery of COMP360 to the patients who need it most. We are optimistic about the road ahead and look forward to further engagement with you all. Thank you.
Operator
[Operator signoff]
Call participants:
Steve Schultz — Senior Vice President, Investor Relations
Kabir Nath — Chief Executive Officer
Lori Englebert — Chief Commercial Officer
Teri Loxam — Chief Financial Officer
Michael Gold — Chief Research and Development Officer
Guy Goodwin — Chief Medical Officer
Analysts from TD Cowen, RBC Capital Markets, Cantor, Evercore ISI, H.C. Wainwright, BTIG, and Canaccord Genuity.
Source
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