The cost could be too high for many people.
The cost could be too high for many people.
COMPASS Pathways plc (Nasdaq: CMPS)reported its financial results for the fourth quarter and year-end 2022. The company has no revenue to report at this time. For the fourth quarter, Compass delivered a net loss of $30.9 million, or $0.73 loss per share (including non-cash share-based compensation expense of $3.3 million).
This was higher than last year’s net loss of $25.7 million, or $0.61 loss per share, (including non-cash share-based compensation expense of $2.8 million). This also missed the Yahoo Finance average analyst estimate for a loss per share of $0.59.
For the full year of 2022, again there is no revenue and the net loss for the year was $91.5 million, or $2.16 loss per share (including non-cash share-based compensation expense of $13.1 million). This was also higher than the previous year’s net loss of $71.7 million, or $1.79 loss per share, during the same period in 2021 (including non-cash share-based compensation expense of $8.6 million).
The cash burn is fairly high. Cash and cash equivalents were $143.2 million at the end of 2022 versus $273.2 million at the end of 2021. In addition the company said that the first quarter 2023 net cash used in operating activities is expected to be in the range of $24 million to $32 million and the full-year 2023 to be in the range of $85 million to $110 million. The company has an accumulated deficit of $261.1 million.
Kabir Nath, Chief Executive Officer, said, “During this past quarter, we commenced our COMP360 phase 3 pivotal program in treatment-resistant depression, a significant milestone for our area of science as these are the first ever phase 3 trials of psilocybin. We have also announced important updates to this program that accelerate the placebo-controlled trial pivotal data read out and streamline the long-term follow up as an integrated component of the pivotal trials. We are confident that this phase 3 program should generate the evidence to support a regulatory filing and to support broad patient access through integration into healthcare systems.”
R&D expenses were $19.8 million for the quarter, compared with $13.6 million during the same period in 2021. Of this increase, $2.7 million was attributable to an increase in other expenses, which primarily related to an increase in external consulting expenses. A further $2.3 million was attributable to an increase in external development expenses. Personnel expenses and non-cash share-based compensation increased by $1.0 million and $0.2 million respectively.
The company has no products close to commercialization. Compass reported that the COMP360 psilocybin therapy in treatment-resistant depression (TRD) Phase 3 program is underway. The program composed of two pivotal trials with an integrated long-term outcomes component. The pivotal trial 1 (COMP 005): single dose monotherapy, n=255, top line data expected summer 2024. The pivotal trial 2 (COMP 006): fixed repeat dose monotherapy, n=568, top line data expected mid-2025.
Compass has also stated that even if it is able to generate revenue, it may never make a profit.
Researchers looking more closely at similarities of compounds and responses.
Company is expanding clinical trials of its psilocybin-based medicine.
Despite a challenging economy, psychedelics companies have accelerated development.
Any analyst knows that market-reactive swings aren’t really a true indicator of what is going on inside a company.
In court filings. Terran Biosciences accused Compass of stealing research related to therapeutic use of psilocybin.
Psychedelic drug company Compass Pathways plc (Nasdaq: CMPS) reported its financial results for the second quarter 2022 and gave an update on recent progress across its business. Compass delivered a net loss for the quarter of $21.0 million, or $0.50 loss per share (including non-cash share-based compensation expense of $3.2 million), compared with $17.5 million or $0.44 loss per share, during the same period in 2021 (including non-cash-share-based compensation expense of $1.9 million). The stock was trading higher in early trading rising by 3% to sell at roughly $16.65.
George Goldsmith, Executive Chairman of COMPASS Pathways, said, “Our decision to appoint Kabir Nath as our new CEO comes at the ideal time as we enter the late stages of COMP360 development and plan for regulatory approval and commercialization. Kabir’s dedication to our mission, extensive experience in leading the commercialization of innovative therapies and track record of successful strategic growth are precisely what COMPASS needs to advance our goal to bring COMP360 psilocybin therapy to the large number of patients who are not currently served by existing treatments. I look forward to working closely with him as Chairman.”
Compass reported that its research and development (R&D) expenses were $15.9 million for the quarter versus $11.4 million during the same period in 2021. The company said, “Of this increase, $0.2 million relates to an increase in external development expenses as we continue to investigate COMP360 psilocybin therapy in clinical and pre-clinical trials. A further $1.6 million and $0.9 million were attributable to personnel expenses and non-cash share-based compensation respectively, due to increased headcount. In addition, other expenses increased $1.9 million, which primarily related to an increase in external consulting expenses.”
On the plus side, the company won a recent patent challenge, and their Phase III clinical trial of the Comp360 psilocybin therapy to come later this year is piquing investors’ interest.
Their total cash position is at $207.2 million, a $35 million decline from the end of 2021. Insiders hold nearly 50% of the shares of stocks, signaling confidence in the company’s prospects. It’s enough money to fund operations into 2024, according to Falvey during the investor call.
The company announced Nath as its new CEO on August 1. Nath has a solid background in medical technology and biopharma. He most recently was senior managing director of global pharmaceuticals at Otsuka, a biopharma company focused on research in neuroscience and treatments for adults with schizophrenia and major depressive disorder (MDD), bipolar disorder, and other neurological and neuropsychiatric conditions. Nath worked previously as president and CEO of Otsuka’s North America Pharmaceutical Business, and was called an “inspirational leader” by Goldsmith during the investor conference call. “We are thrilled to have him at the helm.”
As a result of the hiring of Nath, Goldsmith will serve as executive chairman until the end of 2022, and then as chairman beginning in 2023.
“Following our end of phase II meeting with FDA, we have submitted our Phase 3 protocols and they are under review,” Goldsmith said in a press release announcing the investor call. “We are pleased with the progress and remain on track to start our phase III clinical program this year. We also continue to expand our clinical development of COMP360 therapy with the commencement of a phase II study in anorexia nervosa, a condition of significant unmet need for which there are no FDA approved pharmacological treatment options.”
On July 28, the company launched a multi-center, double-blind randomized controlled phase II clinical trial investigating the efficacy of COMP360 psilocybin, administered with psychological support, in people with anorexia nervosa. “Approximately 20 to 40% of deaths in anorexia. nervosa are thought to result from suicide, the highest suicide rate of any mental illness,” Goodwin said during the investor call.
The company cited other achievements for this year for their COMP360 psilocybin therapy for treatment resistant depression. Those include:
– Holding end-of-phase II meeting with FDA and other regulators.
– Beginning phase III clinical program in treatment resistant depression.
– Launching additional COMP360 clinical development programs.
– Launching an investigator-led study in adults with autism spectrum disorder (ASD), the first ever mechanistic study of psilocybin in autistic adults, co-sponsored by Institute of Psychiatry, Psychology & Neuroscience (IoPPN) at King’s College London and South London and Maudsley NHS Foundation Trust.
– 10 granted patents issued to date covering composition, formulation and method of use.
– Identification of new potential novel drug candidates through the Compass Discovery Center.
Goldsmith also pointed to the company’s investor day, to be held on October 12, as a date for more investor details about the various clinical trials the company is working on, especially about the digital tools to be used for the anorexia work.
Among the four Food and Drug Administration (FDA) pathways for developing new drugs faster are Fast Track, created in 1997, designed to expedite the review of drugs to treat serious conditions and fill an unmet medical need; and Breakthrough Therapy, created by the FDA in July 2012, a process designed to expedite the development and review of drugs that are intended to treat a serious condition, where “preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).”
There have been no psychedelic compounds listed on the FDA’s fast-track approval list (but oxycodone made the list in 2016), and just a few listed on the FDA’s breakthrough therapy list, such as the Compass Pathways’ (NASDAQ: CMPS) psilocybin therapy for treatment-resistant depression in October 2018, and the Janssen Pharmaceuticals’ Spravato in March 2019.
All four FDA expedited drug development pathways are designed to overcome the problems of the long process of drug development, in part fueled by the AIDS epidemic when researchers had called for quicker review and development of drugs by the FDA.
In the 1960s and 1970s, clinical development of a new compound through marketing approval took respectively 7.9 years and 8.2 years, on average, according to one study.
While the development process is designed to ensure efficacy and safety, there is a new and growing acceptance of a new process of advancing drug development based on the rapid accumulation of data, which may soon be working with the randomized clinical trial (RCT) process—it’s called real-world evidence, or RWE.
The FDA promoted the use of RWE for a faster pathway to developing Covid vaccines beginning in September 2021 in a process that continues today.
Another example of RWE effectiveness was demonstrated in a recent study of the outcomes of ketamine from patients treated in 178 participating independent community ketamine practices across the U.S.—a setting that offers significantly different outcomes compared to patients in randomized trials.
The outcomes were measured on 9,016 outpatients with symptoms of depression who received ketamine intravenous therapy (KIT) between 2016 and 2020.
It was the largest published analysis to date examining the real-world effectiveness of a standard KIT induction protocol for depression using data from patients treated at community clinics across the United States.
One of the critical findings of the study is that a richer data set from RWE can form the basis of predictive models that directly inform clinical care. One example is how data about how medications, taken daily or as adjuncts to KIT, can modify the response. “More broadly, point of care data collection and personal sensing streams (e.g. actigraphy, or “wearables”) can establish links between self-report measures and functional health outcomes,” the study reported.
So RWE can help inform clinical care going forward. But what is the relationship now between real-world evidence and clinical trials?
The outcomes of RWE today usually get a lower credibility assignation by researchers working on RCTs. But RWE research is a practice that does not need to be done like a random clinical trial research for it to be reliable, according to another study.
Some of the advantages of RWE include less time and cost compared to RCT; research that can’t be done with RCT, such as safe research on high-risk groups; rapid access and easier information and data retrieval; and more.
The FDA sees the advantages and published draft guidance for working with RWE in September 2021. According to the FDA, RWE can be generated by different study designs or analyses from randomized trials, including large simple trials, pragmatic trials, and observational studies—all built on such real-world data (RWD) as electronic health records, product and disease registries, patient-generated data including in-home use settings, and data gathered from other sources that can inform on health status, such as mobile devices.
As more RWD is collected, RWE is being gradually expanded, with a developing need to be more structured and use the new silos of health data being generated every day. RWE and RCT research are not in a mutually competitive relationship, a study noted. “Presently, RWE research cannot substitute RCT research. However, RCT research, bestowed the highest reliability, and RWE research, perceived to reflect the actual clinical aspect, can be proven to share a mutually supplementary relationship to become the most powerful resource in evidence-based medicine.”
Today, as spelled out in a “Forbes” article by Dr. Dan Riskin, the founder of Verantos, health systems, insurers, and pharmaceutical firms have all created RWE divisions. Insurance companies use RWE to analyze whether high-cost therapies provide sufficient benefit.
But there are still many questions to answer. For example, would an identical RCT trial and an RWE study reach the same conclusions? The FDA is looking into that in more detail, hoping to make RWEs more valid by conducting additional RCT/RWE trial emulations to add to the ten already done.
Meanwhile, progress on RWEs for psychedelics research continues. Compass Pathways is searching for an RWE manager as it further investigates the process. And one company that hopes to make headway in using RWE for developing psychedelics is Albert Labs in British Columbia. “RWE studies are a much faster and vastly less expensive way to conduct and take medicine through regulatory approval to commercialization compared to RCT trials, as evidenced in bringing Covid 19 vaccines to market,” said Malcolm Barratt-Johnson, chief medical officer for Albert Labs in a blog featured on their website.
The psychedelics renaissance is in an expanded growth mode, not just in the U.S. and Canada, but in other countries as well.
But everywhere in the world, it’s a bit of a Dr. Jekyll/Mr. Hyde scenario: startup businesses ostensibly building a serious moneymaking enterprise in a nascent industry, while conducting experiments in labs with novel brain-chemistry substances that could change the world of mental health wellness for good… if all goes as planned.
The usual financial indicators point to a troubled and struggling industry. One example: the North American Psychedelics Index is at its lowest point in 5 years.
And look at some of the top companies and how they are faring: MindMed (NASDAQ: MNMD)reported an accumulated deficit (page 8) of $156.1 million on March 31, 2022; Atai Life Sciences listed 22 potential difficulties involved in their clinical trials that could be serious problems to their growth (https://ir.atai.life/static-files/9c1939ee-7c32-422f-8bdf-de5b2702a0a6, pgs. 46-47); and Cybin, with many impressive developments since the beginning of the year (https://sec.report/Document/0001628280-22-017746/annualinformationformaif-c.htm, pg. 20), reminds investors that “since inception, the company has had negative operating cash flow and incurred losses,” and that the company’s negative operating cash flow and losses “may continue for the foreseeable future”( https://sec.report/Document/0001628280-22-017746/annualinformationformaif-c.htm, pg. 46).
Even so, it’s these companies—plus others in the space, such as Field Trip, Awakn Life Sciences, and Seelos Therapeutics—that always show up in financial reporting as the companies to watch. They may look dark and troubled on paper right now, but according to researchers, their future in the industry is blazingly bright.
Data Bridge, a market research company, reported projections that the global psychedelic drugs market is expected to more than double over the next few years, reaching $8 billion by 2029 from $3 billion in 2021.
Even though the U.S. and Canada lead the global psychedelics market development—there are more than 50 publicly traded companies related to the development or administration of psychedelic-like drugs in the U.S., with at least 3 valued at more than $1 billion—there are other countries working in psychedelics as well, according to the Data Bridge report, including Mexico, Germany, China, France, U.K, Italy, Spain, The Netherlands, Russia, Switzerland, Belgium, Austria, the UAE, Egypt, Israel, and others.
The U.S. had a market share of 93.5 percent in 2021 in the North American region, and is projected to continue experiencing high growth through this year, according to a psychedelic drugs market research report. Germany is expected to dominate the European market with a market share of around 19 percent by 2031, while the U.K. and France are also expected to drive demand in Europe for psychedelics over the next few years.
In 2020, China dominated the East Asia psychedelics market with 40 percent share, and the psychedelics market there is projected to expand at a rate of 17.1 percent from 2021 to 2031.
Psilocybin formulations are showing the most promise for accelerated business development. But MDMA quickly surpassed it this year.
For instance, there are currently a combined 109 clinical studies with psilocybin either recruiting or active in the U.S., Canada, Denmark, Switzerland, Ireland, the U.K., Argentina, Sweden, Germany, and Jamaica.
But there are 116 MDMA clinical studies combined in the U.S., Canada, Switzerland, the U.K., Spain, Israel, The Netherlands, France, Norway, South Africa, Italy and Germany.
Clinical trials have become one of the key indicators for the success of a company in this industry, as it demonstrates both the business determination and scientific acumen to set up a trial as a necessary stepping stone to get to market, along with an ability to continue to fund the expensive research and development that can go on for years.
But what’s really driving the market for psychedelics and their proven mental wellness attributes is an increase in depression across the globe, with more people seeking alternative treatments because standard depression drugs do not address some of their more serious depression issues. The total cost of mental illness in the U.S. is estimated to be $2.5 trillion; and the global antidepressant market is worth over $13.5 billion.
One study reported that the ideal antidepressant has not been found, as the problems of intolerance, delayed therapeutic onset and limited efficacy persist. The complications of treating depression include the fact that it may be “an umbrella construct” with multiple disorders of “varying biological pathophysiology” which each require different treatment.
So far, more and more psychedelics studies appear to confirm that the psychedelic compounds they are studying (especially psilocybin) may provide the answer for treating depression without the disturbing side effects or the need for constantly taking medications.
There will continue to be ongoing issues as the psychedelics industry grows while the mental health wellness world watches, tests various compounds and molecules, and builds new enterprises.
Some issues are predictable, such as problems with patents going forward as in the case of the challenge against Compass Pathways’ (NASDAQ: CMPS) psilocybin patent. That challenge was denied by the U.S. Patent Trial and Appeal Board’s (PTAB) in late June in a decision that appears to actually be a win for both sides.
Other issues are less predictable, such as psychedelics administered without psychological support and/or a supportive environment that may have limited antidepressant efficacy, and in very rare cases, could even worsen a patient’s condition, according to a 2017 study. “We share the view that the presence of psychological support is an essential component of the psychedelic treatment model. But we also recognize that the magnitude and nature of its contribution needs to be better defined and tested,” the authors wrote.
Increasing demand for psychedelic therapy is poised to synergize with an upswell in funding initiatives from other non-medical sources through 2022 and into 2023, potentially jeopardizing standards of safety and professionalism if corners are cut, according to another study. “In anticipation of and, to some extent, already witnessing the beginning of a ‘hype-cycle’, we believe that innovative, pragmatic and exploratory research can play a vital role, helping safeguard the development of a particularly promising, yet vulnerable, approach to mental health care.”
The psychedelics industry is hot all across the globe. It’s making leaps and bounds in terms of developing the science, even as it scrambles for financial resources to keep research and development funded. There are signs of a shakeout of companies this year and into 2023, with more mergers, acquisitions, and partnerships expected.
Multi-million deals will continue—like the $64 million and $70 million investment deals in 2021. Decriminalization and psychedelics drug reform will continue—legalization of psilocybin is making headway in the U.S. (Oregon and Colorado); it is already legalized in Austria, the British Virgin Islands, The Netherlands and Jamaica.
Whatever the business and science dynamics of the industry are today, psychedelics are all aimed at a righteous goal once approved and out of the labs: Provide the world with a new choice for better mental health. The question is how long will that take, and what global power will lead the charge.
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