ATAI - NASDAQ

Good morning. And welcome the atai Life Sciences Fourth Quarter and Year-End 2021 Financial Results and Corporate Update Conference Call. Currently all participants are in a listen-only mode. After the speakers' presentation, there will be an open question-and-answer session. This is the live webcast via the News & Events section of the company's website at www.atai.life and is being recorded. A replay of the webcast will be available on our website. Joining me today are Florian Brand, Chief Executive Officer and Co-Founder, and Dr. Srini Rao, Chief Scientific Officer and Co-Founder. The press release reporting our financial results is available on atai's website. Please take a moment to read the disclaimer about forward-looking statements in the press release. During today's call, we will make certain forward-looking statements that are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. While these statements represent management's current expectations of projections about future results and performance, atai's actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations. In addition to any risks highlighted in the call, these statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission. We caution not to place undue reliance on these forward-looking statements which speak only as of today, March 30, 2022. And except as may be required by applicable law, atai disclaims any obligation to update such statements even if management's views change. I will now share a short video from our Founder and Chairman, Christian Angermayer.

We are in a state of crisis, real crisis globally, when it comes to mental health. Over a billion people – that's about one in seven worldwide – live with a mental health disorder. And many argue this is unfortunately just the tip of the iceberg and that the real number may be way higher for at least three main reasons. First, this 1 billion is a pre COVID-19 figure. The pandemic has substantially worsened the global mental health situation according to leading experts. Second, mental health issues continue to be stigmatized. Not everyone who needs help is coming forward to be diagnosed and treated. Many unfortunately still suffer in silence. Luckily, this is gradually changing and great work, like what we are doing with our philanthropic arm, atai Impact, is underway to reduce such stigma. But as the stigma vanishes, I believe the number of diagnosis may increase meaningfully. And third, and generally, I personally believe the world we are building with all the technological innovations around us is not good for our mental health. Constant change, misuse of social media, overstimulation, all this is totally toxic for our brain, and it's taking its toll on all of us. My personal belief is unfortunately that the number of people globally living with mental health conditions will meaningfully continue to increase in the years to come. And even those who are receiving help and treatment today aren't always getting the help they need. At atai, we believe too many current treatments are one size fits all. And one size does not fit all when it comes to mental health. That's why we are progressing a broad pharmacologically diverse pipeline. We are developing psychedelic and non-psychedelic compounds, as well as cutting edge digital therapeutics that show real promise in mental health treatment. The fact that psychedelics have the potential to massively improve various mental health issues is becoming more and more widely accepted. Yet, questions about defensibility, namely patents, and potential commercialization remain. Regarding patents, we at atai have filed a broad range of patents across our respective portfolio of innovative psychedelics and obviously non-psychedelic therapies as disclosed in our public filings, ranging from compositions of matter to methods of treating various indications of interest to atai. And of course, we believe that multiple of our compounds may be eligible for data exclusivity. Don't forget, atai has been a pioneer in psychedelic medicine. Given our first mover advantage, we had the time and the team and the capital to acquire and/or file new patents around those innovative psychedelic therapies we believe have the potential to be medically viable and which are consistent with our business model. When it comes to commercialization, we are proactively working with various stakeholders to ultimately enable patients to access our innovative treatments once they are approved. We have achieved so much, and yet this is only the beginning of our incredible journey. Just as we appreciate today the groundbreaking achievements in vaccine development of Moderna and BioNTech for the COVID-19 pandemic, companies actually now considered to be household names, in the future, it is my personal ambition that atai will be recognized as the driving force in healing mental health disorders globally, and that atai actually will be synonymous with the solution for this crisis. I dare to say this with such confidence because of our unique business model. The compounds we have historically identified and selected have had prior evidence in humans, either because they had been approved in parts of the world as medical solutions, used ritualistically, or have had other anecdotal uses. I truly believe that atai is one of these rare companies where the stars are aligned. The mission, the strategy, the leadership, the execution, and the significant unmet need in mental health. As you hopefully can tell, I couldn't be more excited about atai's future and its potential to play a vital role in solving one of humanity's biggest challenges. It's imperative to me to be in this journey for the long run, to make this world a better place, and to play a meaningful role in bringing healing and relief to the millions of people currently suffering from the mental health disorders atai is targeting. I refuse to disappoint them. And with that, I'll hand over to my amazing leadership team to tell you more.

Good morning, everyone. It's a pleasure to be here today. And I'm really excited to walk you through our strategy, our achievements since January 2021, and through our upcoming R&D milestones this year and beyond. 2021 was a truly transformative year for atai. We made important progress across our programs, expanded our diverse pipeline with multiple shots on goal, and secured approximately US$410 million in financing. This allowed us to enter 2022 with US$362 million in cash, putting us into a very, very strong position to work up towards our strategic goal, achieving clinically meaningful and sustained behavioral change in mental health patients. To achieve this goal, we will focus on three strategic pillars. One rapid acting intervention; two, ongoing digital support; and three, biomarker driven precision mental health. Let's turn to the first pillar, rapid acting intervention. This pillar is really about developing our first, second and third generation compounds in the most effective and most efficient way. We anticipate these compounds to be highly differentiated to show rapid acting improvements in mental health disorders. And we're especially interested in compounds with strong neuroplastic properties that open a therapeutic window to initiate behavioral change in patients. To give you an example, in the context of depression, this first pillar is really about lifting a patient out of depression in a quick and meaningful way, but then we want this patient to stay out of depression. And this leads me to our second pillar, ongoing digital support. This pillar is about keeping mental health patients in state of remission. And it is grounded in innovative digital care provided patients before, during and after treatment. While these tools are especially relevant for the psychedelic-assisted therapies that we're developing, we see great potential to apply digital support across our entire drug development pipeline. We believe pairing digital therapeutics with a rapid acting pharmacological agent from pillar one will allow us to achieve sustained behavioral change in mental health patients. What works for one patient, though, might not work for another. As we all know, the mental health patient population is highly heterogeneous. Which brings me to our third strategic pillar, biomarker driven precision mental health. When it comes to mental health, there is no one size fits all approach. So, this pillar is about identifying patient subtypes using biological and digital biomarkers to treat patients with a therapy that is right for them at the right moment in time. We believe this will reduce the need for trial and error and give each patient the best chance of receiving the treatment that works for her or him. Each of these pillars has a true disruptive potential on its own. But it's by combining them that we can really unleash their full potential, allowing a true leap forward for mental health patients by achieving clinically meaningful and sustained behavioral change. And we have already laid the groundwork for all three pillars, for example, by building out our digital, data and biomarker teams, and we will continue to be highly active in all of these three pillars. That said, our focus for the next few years will remain on pillar one, rapid acting intervention, generating value by executing and further expanding our drug development programs and by further strengthening the robust patent portfolio of our compounds. Let's now have a closer look at our achievements in our first pillar since January 2021 and then look ahead what we can expect over the next two years. Since January 2021, we launched eight new programs, including three programs dedicated to drug discovery. This brings our total number of drug discovery and development programs to 13 as of today. It goes without saying that we intend to stay highly active in business development this year and also beyond. From an R&D perspective, we also achieved many meaningful milestones in 2021. Allow me to highlight just a few of them. We saw positive Phase IIb data for COMP360. The results of this groundbreaking trial in treatment resistant depression, or TRD, led us to increase our stake in Compass Pathways to 22.8%. We also shared positive Phase IIa proof of mechanism data for RL-007. This compound is being developed to treat cognitive impairment associated with schizophrenia, a condition that today has no approved treatment options. And in September 2021, we initiated the Phase IIa proof of concept trial with PCN-101 in TRD. We anticipate top line data for this trial by the end of this year. And we also recently received IND clearance from the FDA to run our first clinical study with this compound in the United States. So, as you can tell, we made a lot of progress here. And as we look ahead to the upcoming two years, we're anticipating at least 14 R&D catalysts. Alongside these exciting R&D milestones, we saw further validation of our approach to capture the value of our programs. In March 2021, we were thrilled to announce a collaboration with Otsuka Pharmaceuticals. This significant licensing deal for PCN-101 represents the first major partnership between a biopharmaceutical company developing psychedelics and large pharma. When it comes to capturing the value or monetizing our programs, we have a high degree of optionality. And with the IPO of Compass Pathways and the licensing deal with Otsuka, we have already successfully demonstrated some of the ways in which we intend to capture value in the future. We will decide the best and most viable option of capturing value, including self-commercialization, for each of our assets on a case by case basis. Before handing over to Srini, let me give you an update on our philanthropic arm, atai Impact, that we announced in October 2021. Since then, atai Impact has launched the atai Fellowship Fund at MGH's center for the neuroscience of psychedelics. We also made sizable donations to MAPS and towards humanitarian support in Ukraine, with a special focus on mental health. We believe that these philanthropic efforts are strongly aligned with our vision of healing mental health disorders for everyone, everywhere. Our Chief Scientific Officer, Srini, will now walk you through a more detailed update on our pipeline.

Thanks, Florian. As Christian and Florian have mentioned, we're in a truly exciting time here at atai. Since the start of 2021, we've added five new drug development programs and three new technologies to our portfolio. We completed two important trials last year, and we're rapidly advancing the rest of our growing pipeline towards the clinic. As shown on this slide, our pipeline targets many important indications in mental health, including cognitive impairment associated with schizophrenia, treatment resistant depression, generalized anxiety disorder, post-traumatic stress disorder and opioid use disorder. The advancement of our deep pipeline will result in many clinical readouts across this year and next. In 2022, we're eagerly anticipating data from our ongoing Phase IIa proof of concept trial for PCN-101. This is a potentially groundbreaking, at-home, rapid acting therapy for TRD. Later this year, we intend to conclude a Phase I comparative bioavailability study to bridge from the IV formulation to a subcutaneous formulation of PCN-101. We believe that this formulation will be key to supporting at-home use. We expect continued clinical advancement in our other programs. We have a Phase I trial readout and Phase IIa trial initiation for GRX-917. We've initiated a Phase I trial of Kures and we also anticipate Phase I trial initiations at EmpathBio, Viridia and Revixia. In total, we expect to obtain six Phase II and four Phase I trial readouts across 2023 and 2024. That's an amazing number of milestones in a really short period of time. The second program on the list is targeting cognitive impairment associated with schizophrenia, or CIAS. Schizophrenia is a leading cause of disability worldwide primarily due to the marked and essentially ubiquitous cognitive impairments that are associated with this condition. There are no treatments currently approved for CIAS. Our platform company, Recognify Life Sciences, is developing RL-007, a GABA glutamate and cholinergic receptor modulator for the treatment of this debilitating condition. RL-007 has been tested in nine third-party clinical trials to date with pro cognitive effects observed in two Phase I trials and one Phase II trial. Data from a previously conducted Phase I trial are shown here. This study involved the scopolamine challenge, a widely used clinical model of cognitive impairment. Some of the deficits induced by this challenge, including attention, as shown on the left, and verbal memory shown on the right were improved by the coadministration of RL-007. The beneficial effects were present only at 30 milligram dose as highlighted by the circles on the two graphs. Benefits were absent in higher doses, consistent with an inverted U-shaped dose response curve. Importantly, this pro cognitive effect was associated with alterations on quantitative EEG or qEEG. Specifically, it was found that RL-007 induced a relative spectral shift from lower to higher frequencies, thus providing a biomarker for target engagement. More recently, a large Phase II trial was conducted in 181 patients with diabetic peripheral neuropathic pain, the results of which are shown here. This condition is often associated with subclinical cognitive impairments due to the impact of longstanding diabetes on brain vasculature. Again, we saw pro cognitive effects, notably in the domain of verbal memory. The benefit was seen in both immediate and delayed recall, as shown on the left and right hand sides of this graph. These results were consistent with the results of the previous Phase I trial I mentioned previously. As you can see on the graphs, the benefit was seen only at the lower dose level, again, consistent with an inverted U-shaped dose response curve. Building on these studies, in December of last year, we announced the successful outcome of our Phase IIa proof of mechanism study of RL-007 conducted in patients with CIAS. The results of this trial are summarized here. In this 32-patient single arm, single blind study, RL-007 demonstrated clinically meaningful pro cognitive effects. As you can see, there are dose dependent improvements on several of the cognitive measures that we assessed. This was evident on the Symbol Coding test, a broad measure of cognitive function that correlates highly with the MATRICS Consensus Cognitive Battery total score. The beneficial effects were most pronounced at the 20 and 40 milligram doses and started to wane at 80 milligrams. These data are consistent with the inverted U-shaped dose response seen in earlier studies. Additionally, the trials show changes in qEEG that were consistent with the previous results in the Phase I trial involving the scopolamine challenge. Based on these exciting results, we have decided to move into a larger randomized, placebo-controlled, Phase IIa proof of concept trial. This trial will be powered to show improvements on cognitive measures. We plan to initiate the study later this year. Next, I want to focus on our potential therapies for treatment resistant depression, or TRD. Depression affects 300 million people globally, and ranks as a second leading cause of disability worldwide. While current treatments are effective for certain patients, a significant percentage of patients either respond inadequately or relapse. A third of patients are classified as being treatment resistant. This is likely partly due to the heterogeneity of the TRD patient population. Let's first discuss Compass Pathways and its development candidate, COMP360, a proprietary formulation of psilocybin. As Florian mentioned, we consider the Phase IIb trial to be a resounding success. Spanning 233 patients, 22 sites and 7 languages, this was the largest, most logistically complex and most robust psilocybin trial ever conducted. The results of this randomized, double-blind, dose-controlled trial demonstrate that COMP360 when coadministered with psychological support resulted in a rapid and durable improvement in depression symptoms. When compared to the 1 milligram dose, a single administration at 25 milligrams of COMP360 achieve a 6.6 point reduction from baseline to week three on the Montgomery-Åsberg Depression Rating Scale, or MADRS. This is a remarkable improvement. Most recent approvals were based on a MADRS change of 4 or less. With a p value of less than 0.001, the primary endpoint was robustly met. The compound was generally well tolerated with over 90% of treatment emergent adverse events classified as being either mild or moderate in severity. Looking forward, Compass is scheduled to have an end of Phase II meeting with the FDA in late April. They anticipate kicking off a Phase III trial later this year. Perception Neuroscience is developing PCN-101, a formulation of R-ketamine for the treatment of TRD. R-ketamine is a glutamatergic modulator being developed as a rapid acting antidepressant with non-dissociated properties, meaning it has the potential for at home use. A Phase I study of IV R-ketamine was completed in September 2020. The agent was well tolerated over the dose range explored and no serious or unexpected adverse events were observed. Following these successful results, in September 2021, we initiated a Phase IIa proof of concept trial of IV PCN-101 in patients with TRD. This double-blind, placebo-controlled trial consists of three parallel arms or 31 subjects each. Subjects will receive a single dose of placebo or one or two doses of R-ketamine. Depressive symptomatology will be assessed in the subsequent 14 days using the MADRS. The trial is currently active across sites in Europe and US sites will be launching soon. Data from this important study are anticipated by the end of this year. Positive results of this trial could be game-changing for patients as current rapid therapies require administration in a clinical setting. This comes with significant burdens for both patient and provider. In January this year, we announced the clearance of our investigational new drug application by the FDA. This clearance supports the conduct of a Phase I DDI study, which we intend to complete this year. We also anticipate completing a Phase I relative bioavailability study this year. As I mentioned previously, this trial was designed to bridge the current IV formulation to a subcutaneous one. This formulation will be key to supporting the potential of at-home use. In addition to these clinical programs, we have two preclinical programs focused on TRD entering the clinic this year. Our platform company, Viridia Life Sciences, is developing VLS-01, a formulation of N,N-dimethyltryptamine or DMT. In addition, our platform company Revixia Life Sciences is developing RLS-01. This is a formulation of Salvinorin A, a pharmacologically unique psychedelic compound. We plan to initiate both Phase I trials with these compounds later this year. So we have a total of four exciting TRD drug candidates in our pipeline. Together these represent a range of pharmacologically unique treatment options for TRD, a heterogeneous indication with an urgent need for innovation. Turning to anxiety. Let's talk about GRX-917, which we're developing GABA therapeutics for the treatment of anxiety disorders. Anxiety disorders are the most prevalent of mental health disorders. It's estimated that approximately one-third of people are diagnosed with an anxiety disorder at some point in their lives. GRX-917 is a deuterated form of etifoxine, a compound that was first approved in France in 1979 for the treatment of anxiety. Pharmacologically, etifoxine is thought to act as a TSPO agonist, increasing the production of neurosteroids like allopregnanolone. Etifoxine is rapid acting, like benzodiazepines, but without significant sedation, cognitive impairment or ataxia. Recent analysis of post marketing surveillance data encompassing over 14 million prescriptions has demonstrated etifoxine, unlike benzodiazepines, is not associated with abuse or dependence. In June 2021, we initiated a randomized, double-blind, placebo-controlled Phase I trial of GRX-917. As outlined at the bottom of the slide, this study is a single and multiple ascending dose trial. It's focusing on the safety, tolerability, PK and pharmacodynamics of GRX-917. Based upon the mechanism of action of this compound, we're using qEEG as a target engagement biomarker, looking for increase relative spectral power in the beta band. Such changes have been demonstrated with IV allopregnanolone and related compounds. They were also noted in a Phase I trial of etifoxine that we conducted in 2019. We have completed the single ascending dose element of the Phase I trial and the multiple ascending dose component is ongoing. Top line for the entirety of the trial are expected by the middle of 2022. We anticipate initiating a Phase IIa proof of concept trial later this year. We're excited at the prospect of GRX-917 combining the best characteristics of benzodiazepines and SSRIs, potentially offering patients with anxiety a new and much improved treatment option. Next we'll move on to opioid use disorder, or OUD, a major health challenge, particularly here within the US. Both of our OED-focused compounds are presently in Phase I clinical trials. At DemeRx IB, we're developing DMX-1002, an oral formulation of ibogaine, which is a naturally occurring psychedelic compound. In September, we dosed the first subject in Phase 1 component of a combined Phase I/IIa trial. This trial was designed to assess the safety, tolerability, PK and efficacy of DMX-1002. We expect to obtain safety data from the Phase I portion of this trial later this year, results that we're eagerly anticipating. Our second OUD-focused company, Kures, is developing KUR-101, a deuterated form of mitragynine. This compound, which is the active moiety in kratom, is considered an atypical opioid receptor modulator that is thought to be safer and better tolerated in classical opioids. Our Phase I single ascending dose trial of KUR-101 was initiated earlier this year, with the first subject dosed this month. This study is expected to read out by the end of this year. By the end of the year, we will have 10 compounds in Phase I or Phase II. This is a remarkable achievement for a company that is only three-and-a-half years old. On to our discovery stage programs. In the past year, we've added two new subsidiaries, TryptageniX and Invyxis, targeting NCE development. These two companies are focused on bio-prospecting and medicinal chemistry respectively. They supplement the AI-based computational chemistry approach of EntheogeniX, a company which we founded in 2019. Taken together, these three discovery platforms, each incorporating a unique approach, means that atai boasts one of the most robust discovery engines in CNS. These platforms will be crucial to the expansion of our pipeline with therapies that are even more innovative in the years to come. Our digital therapeutics, or DTx, and data efforts are key elements to achieving clinically meaningful and sustained behavioral changes in patients. DTx and multimodal data collection and analysis are integral elements of our strategy concerning ongoing digital support in precision mental health. We are focused on digital therapeutics to improve the safety, efficacy and scalability of our compounds. With Psyber, we are developing brain computer interface based digital therapeutics to ultimately provide a digital guide to support psychedelic administration. With Introspect Digital Therapeutics, we're developing personalized app-based treatments to improve patient outcomes. In March 2021, Introspect launched a user acceptability trial for participants that were undergoing ketamine therapy. Finally, our data analytics platform synthesizes digital, biological and phenotypic data to allow for better characterization of patients in our target indications. Analysis of these data may allow for the generation of novel biomarkers, ultimately supporting our goal of precision mental health. We have come a very long way in our first years of public company, and I'm immensely proud of all that we've achieved. We have an extremely robust pipeline, cutting edge discovery platforms and highly innovative digital and data products. These programs put us in a particularly strong position to achieve our upcoming clinical milestones, and ultimately, make a meaningful difference in the lives of patients with mental health disorders. With that, I will now turn the call over to Greg for an overview of our financial highlights Greg?

2021 was a pivotal year for atai and put us on a strong financial foundation to support our ongoing growth in pursuit of our mission. Our year-end 2021 cash balance of $362.3 million represents a cash runway for approximately two years. It will fund the operations into 2024, inclusive of our ongoing business development activities. During 2021, we raised net proceeds of $410 million from our June NASDAQ IPO, the Series D and other financing activities, and we received $20 million from the Otsuka license and collaboration agreement in Q2 of 2021. During the year, we made important strategic investments in our platform companies, totaling $80.2 million, notably $52.5 million in ccc Compass Pathways, $14.9 million in IntelGenx, our oral drug delivery formulation company, and $10.6 million in GABA in support of their pursuit of innovative treatments for anxiety disorders. Our full-year 2021 total operating expenses were $156.2 million, with R&D expense of $48 million and G&A expense of $92.8 million. Non-cash compensation expenses for the full-year 2021 were $63.4 million, with $19.4 million recorded to R&D and $44 million to G&A. Or R&D expenses for 2021 represented an increase of $36.6 million over 2020, driven by increased CRO expenses related to advancements in R&D programs and increased R&D personnel costs. Included in R&D personnel costs was an increase of $19.1 million of share-based compensation expense. Acquisition of in-process R&D expense recorded was $15.5 million for the 12 months ended 2021 related to our investments in TryptageniX, InnarisBio and Neuronasal, compared to $12 million for the prior 12 months ended December of 2020. G&A expense for 2021 increased by $12 million over last year, driven primarily by G&A personnel costs, professional consulting fees and other G&A costs related to supporting platform growth and public company requirements. These increases were partially offset by a decrease in G&A share-based compensation expense of $22.9 million. And looking forward, we expect R&D and G&A operating expenses to increase year-on-year as we initiate multiple clinical trials across the pipeline and we make the necessary investments in our talent and infrastructure to support the continued growth of our research and development efforts. In closing, important to understand that we are well capitalized, well organized and built for the long term, with substantial cash resources to fund our operations through numerous value-creating clinical development catalyst this year and next. Thank you. And I'll hand the call back to Florian.

Thanks, Greg. I'd like to thank our employees for their ongoing dedication to advancing our vision and to our investors who actively support our work. We are incredibly proud of our strong execution in 2021, delivering on advancing our programs, validating our business model through key collaborations and further expanding our diverse pipeline. This ongoing positive momentum positions atai for an even more exciting future. We anticipate 10 of our programs to be in active human trials by the end of the year, with at least seven clinical readouts in the next two years. With that, we are very happy to take your questions.

Andrew Tsai at Jefferies.

First question is on the GRX-917, the etifoxine program as data coming up mid-2022. So I'm just curious what would drive a no-go decision for you guys? What's a deal breaker in your view in that Phase I dataset?

I think the most important thing there would be some sort of safety and tolerability concern. That's going to be the key point, not surprisingly, as we've mentioned, we're pushing the doses and looking at quantitative EEG and other things, but the most important thing is going to be safety and tolerability.

Second, my follow-up question is PCN-101. At the end of the day, do you think this drug is completely free of the unwanted side effects that we see with ketamine or S-ketamine? And if not, then can you maybe share some examples where there has been an approved drug that does cause subtle hallucinations, dissociation, but it's still used at home?.

The doses that we picked based on the Phase 1 trial were associated with very minimal – either no dissociative effects or very minimal dissociative effects. So, that's actually how we made the decision around those doses. So of course, we need to validate that. We need to confirm that in a patient population. So, obviously, that's going to be an important objective of the Phase II. In terms of compounds that have some sort of dissociative or psychedelic effect, the one example that I like to provide is lorcaserin or Belviq. It is a compound that was approved for obesity. So, obviously, a very widespread condition. The compound is a 5-HT2C agonist. It has 5-HT2A activity. If you took 4 or 5x the normal dose, the normal daily dose, you actually got a pretty solid psychedelic effect. And that's actually reflected in the clinical trial section of the label. So, I think there's precedence. It's all about therapeutic index.

And our next question will come from Neena Garg at Citi.

I was just wondering if you could talk a little bit about on PCN-101, kind of following up on the last question. I know you said that you recently got your IND cleared by the FDA for this program. So, if you could talk a little bit about how the FDA is feeling about potentially studying PCN-101 in an at-home setting in a later stage study and kind of what they would require from this initial study from a dissociative effects perspective in order for you to feel to do that.

It's not going to come as a big surprise that this is ultimately going to end up being a review issue. Right? So, they're not going to really opine until there's actual data. And it's hard to fault their position on this. So, in general, would you anticipate what would you require? I think the therapeutic index is going to ultimately be an important element. This is scheduled, of course. Ketamine is scheduled as well. It's a Schedule III compound. There are plenty of at home Schedule III compounds, right? It's even Schedule II compounds. So, I don't anticipate that being a major issue. Of course, the other element of this is formulation. We want to make sure that we can control the use of this compound, and that's one of the reasons that we actually are moving forward subcutaneous. There are devices that allow us to really tightly control administration of using that route of administration.

Maybe very quickly, if you could also talk a little bit about the differentiation for the program at [indiscernible], I'm just curious if you could talk a little about the formulation, how you're thinking about administering it in a Phase I study, that would be great.

Our primary formulation there is an oral transmucosal film. So, we're developing this in conjunction with IntelGenx. And the reason we're doing this is that you can really tightly control. You almost engineer the release profile using oral transmucosal film. So, what we want to accomplish here is a T max of, say, 5 to 10 minutes, somewhere in that ballpark. We want to wrap up the entire psychedelic effect over the course of maybe 45 minutes or so. The rationale here is to fit into the S-ketamine treatment paradigm. But with respect to that release profile, we want it to be kinder and gentler on the upswing. So, this is in contrast to, say, inhalational approaches. And we're not entirely sure how the duration of psychedelic effects impact long-term efficacy in terms of stability long term. But having something on the order of an hour seems to make sense versus something that's close for 5, 10 minutes. And of course, that's logistically a lot easier to deal with than something that's, say, five or six hours.

My next question will come from Charles Duncan at Cantor Fitzgerald.

Congratulations on all the progress in the last year. And thank you for the very thorough overview, that was helpful. Had a couple of questions regarding the pipeline. There's been some discussion about PCN-101 and proof of concept data and TRD later on this year. But I guess I'm wondering how could you define good versus great results? And is there a potential for exceeding S-ketamine activity or duration of that activity?

Let me take the last question first. So if you think about the preclinical data, there's multiple experiments that have been done, there was a greater magnitude of efficacy seen with R-ketamine versus S-ketamine. And equally importantly, there was a longer duration of activity that we're seeing. Now, in clinical settings, there's anecdotal data that suggests that maybe receiving a ketamine is a little bit more efficacious than S-ketamine. So you take this all together, and there's a potential for better efficacy and/or longer duration of efficacy with R-ketamine versus S-ketamine. So going back to the first question, in terms of what's a win? Of course, we want to hit our primary endpoint, right? Not a big surprise. So seeing a substantial and statistically significant improvement on the MADRS is going to be key. But equally important is the therapeutic index, which I alluded to earlier. Right? So, we want to see good multiple between the efficacious dose and the therapeutic dose. We've sort of pre-selected that, right? So, the 60 milligram dose, the high dose that we're looking at, is indeed essentially non-psychedelic or non-dissociative. It's right on the cusp. And of course, there may be differences between healthy volunteers and patients. The 30 milligram dose is quite substantially different in both healthy volunteers and hopefully in patients as well.

One quick question on RL-007. You mentioned moving forward in Phase IIa and you also mentioned the complexifier, if you will, of an inverted U-shaped dose response curve. So, have you disclosed the dosing that you plan to pursue and the duration of that study?

There is an inverted U-shaped curve. We saw the most robust benefits both – if you take it all in aggregate, quantitative EEG, symptomatic improvement, we saw the best efficacy in a 20 to 40 range. So, it will be somewhere in that ballpark. That shouldn't be a great surprise based on the proof of mechanism study. Duration and all these other items, we're in the process of working out now. We have had multiple SAD meetings and kind of finalizing our trial design there. And, of course, as that becomes a bit clearer, we will, obviously, publicly disclose that.

Final question for Florian. More of a big picture kind of strategy question. If you fast forward, let's say three years or even two years, what do you think this type of call will involve? Will it be primarily discussion of different pharmacological agents that are moving forward into late stage development? Or will it also include increased visibility on the digital therapeutics?

Very short answer is both. As I said earlier, we'll be laser focused on the very first pillar. So, the rapid acting dimension is our drug development pipeline and we will anticipate that a large share also of these calls will be about that. But while we're progressing through our trials and we anticipate that we will have this year, the first time our digital therapeutic, combined with our compound in a clinical trial, or in multiple ones, that we, of course, will also more and more talk in detail about the combination products going forward. So, yeah, lots of R&D catalysts coming up. And, yeah, looking forward to the next years to discuss the progress.

Our next question will come from Ritu Baral at Cowen.

Maybe we'll start with a high level for Florian. Florian, you had mentioned as one of your pillars going forward, you're going to do biomarker-driven precision mental health strategy – or investigate strategies. When you count biomarkers in psychiatry, neuro psychiatry, are you thinking genomic biomarkers? Are you thinking EEG-based biomarkers and other electrophysiological biomarkers? How should we think about that? And then, I have some more detailed questions on the programs.

In general, we think about biological biomarkers and digital biomarkers, digital phenotyping. Srini can go a little bit into detail on the biological one. We have actually one program running the psy products that looks at metabolomic profiling of patients, which we believe is very exciting. And then, on the digital side, there's very interesting research going on, on behavioral biomarkers. So, there's [indiscernible] typing behavior, etc., so that allows us by using our digital therapeutics, hopefully, in future to better characterize patients. So, it's really both, biological biomarkers and digital biomarkers. And, Srini, I don't know if you want to deep dive a little bit into the metabolomics angle that we have.

Just briefly, the psy products is really focused on that, looking in particular markers of mitochondrial metabolism, essentially. And there's an association with mitochondrial metabolism and certain subsets of depression. So, this is unique, right? This is a very clear biologically underpinned form of depression. And so, we want to test these hypotheses. So, address the mitochondrial dysfunction, non-psychedelic, clearly very different, and see if we can improve mood in that particular subset.

A quick follow-up on etifoxine. As you think about the data that's coming out, you said mid-year and the qEEG beta band shift. How should we be looking at the magnitude of that shift versus, say, the other GABA PAMs in development? So, you've got a GABA plus serotonergic component to the mechanism. So, do you need as much of a beta band shift for this drug to have equal efficacy as other GABA PAMs?

We don't necessarily anticipate the same magnitude of shift, and there's a very simple reason for that, right? So, this compound is increasing production. There's a seeming site specificity or regional specificity in the brain to that. This is in distinction to an agonist, right? Whether it's a PAM or a direct agonist, you typically see a much larger pharmacodynamic effect of such compounds. So, again, don't necessarily anticipate – we'll see how it all plays out, right? We're doing a lot more dose ranging with 917 than we could do with etifoxine. But still, that's not necessarily the expectation.

Getting back to 101, almost a housekeeping question. On the safety side, are you monitoring heart rate and blood pressure that is an effect of S-ketamine? And do you have evidence that you'll have less of sort of a hemodynamic effect or heart rate effect than Spravato? And does that factor into the ability to dose at home?

Yes, we are, of course, going to monitor blood pressure, etc., in our trial. As for whether that will affect at home use? The answer is probably yes. At the moment, it's really difficult to say whether or not there's any benefit versus S-ketamine. Right? So, Phase Is are not that big. There are, of course, healthy volunteers. It's a little bit different. It was IV, right? So IV is also going to be a little bit different. Ultimately, we're going to go forward with subcutaneous. So we're going to be doing that relative bioavailability study a little later this year. So, we should have results by the end of this year. That's going to be the real key in terms of what the blood pressure profile looks like. And of course, taking that and putting it into intubations, that's going to be the most significant.

Our next question, we'll be bringing on Judah Frommer from Credit Suisse.

First, just following up on 101, that subcu formulation. Can you remind us of the timing relative to trial data for the bridging study and how tightly those will be reported? And then, also, Srini, you kind of talk about, we will go forward with subcu. Is there any potential engineering or stumbling block that you could foresee pushing off subcu formulation? And is there a world where we're only IV or it's just a matter of time until we get to subcu?

So answering that latter bit, clearly, IV is not consistent with [indiscernible]. So, we will develop – subcu is really the best from our perspective. It gives us the most robust and least variable pharmacokinetic profile compared to, say, intranasal. So that's what we're really interested in subcu. In general, subcutaneous is not necessarily that difficult to formulate, right, in the grand scheme of things. You do have to worry about local tolerability. We've addressed all of those issues at this point, at least preclinically. Of course, we have to demonstrate that in humans, but there's lots of optionality there. In terms of the timeline, yes, we anticipate both results towards the end of this year.

Just moving back to the precision biomarker discussion, how should we think about kind of the overall strategy with biomarkers? Is it more for patient enrichment? Is it coming up in conversations with regulators? Obviously, it's a relatively new area of kind of a precision approach to drug development. So, curious if it factors into those. And then, anything that can be integrated into potentially patents and exclusivity from a biomarker perspective?

101, absolutely. Kind of expanding on that, if it's a companion diagnostic type approach, absolutely, it's going to be in the label. Of course, we're going to have IP around that. Right? So, that would be obviously fantastic. Why are we doing it? Well, we know that depression is really heterogeneous, right? The phenotypes of final common pathway for probably a whole bunch of underlying pathophysiology. So, that may explain why you have treatment resistant depression, why do you have a third or half of patients that don't respond. Presumably, some of it is its underlying pathophysiology. Right? So, that's what we want to address. We want to be able to increase the effect size, right? What is the magnitude of the change on the MADRS as an example. Decrease variability, so, again, tying into effect size. So, there will be an enrichment element, potentially leading to smaller trials, but, of course, ultimately, something that may very well end up in the label.

Lastly, maybe for Greg, can you just help us with kind of cash priorities over maybe the next year or two? R&D, is there any way to force rank the programs that you have anticipated over the next year in terms of a capital need and then business development and how dynamic kind of those levers are?

We look at the year just transpired, that's been a remarkable win for the financial footing for the company between the success of $410 million coming in between the IPO, the Series D, and in a position of two years of runway with $362 million at year-end. This is sufficient budget to manage all of our clinical/preclinical programs, what we've heard about today, along with the headroom for investing in additional BD, as Florian and Srini have mentioned on the call. So, from a financial strategy perspective, as your CFO here, pretty proud of what we've done, and the heavy lift to get to this point over the last two years and grateful [indiscernible] investors and the team that we built. Just pretty remarkable. And yeah, I think investors can look at this as a really solid foundation footing here on the financial side.

Is it right to think about later stage programs as the most expensive? Or are there any kind of Phase Is you'd highlight as being more expensive than a kind of a typical Phase I drug trial?

As a general rule, if things get a bit more expensive as you move through the phase of the clinical development, from experience we all have, I think the situation-specific allocation of capital across the platform, this is something we take a close look at, we'll be very responsible and thoughtful about how we allocate the capital. So, we both drive these programs forward and live within our means. And so, I would answer it that way. And more to come.

Maybe very quickly to add, Judah, I think what we basically do is a very continuous program review where we thoughtfully look at the capital deployed and basically new data coming out. And I think the example of Compass Pathway where we increased our stake based on the strong data that came out is a very good example how we make capital allocation decisions across our pipeline. So that's a really continuous process where we over and over again review programs and make the decisions for, in general, resource allocation as we for many programs not only provide capital, but also our deep domain expertise and people that work on all those programs.

For our next question, we have Brian Abrahams from RBC Capital Markets.

Congrats on all the progress and really appreciate the comprehensive overview of the pipeline. Maybe starting off with – on COMP360, which you alluded to the positive proof of concept data we've seen for psilocybin and which you obviously have a stake in the success of, but I'm also wondering – and sort of recognizing that your own psychedelic compounds all have different profiles in terms of administration and half-life. But I guess I'm wondering if there's any generalizable learnings you can take away from that COMP360 dataset to help inform your future trial design, conduct, what you might be looking for going forward for your proof of concept studies as those programs mature?

The trial was essentially the same sort of thing that we're doing with R-ketamine, right? We're doing a single administration, they did a single administration. It's really to understand, in a robust fashion, what the duration of efficacy is. So, that was, again, really critical. As we move forward with DMT and other things, we're anticipating readouts, just like we're anticipating readouts for R-ketamine. So, I don't think there's anything that's not going to be too shocking. When we introduced those factors of redosing – R-ketamine, obviously, is going to be the next trial. IV is not particularly great for that. For DMT and others, we're still working on when that will get introduced in the studies. But I think the most important thing there was redosing. That's going to drive long term efficacy. That's what's going to drive these folks into remission, which, of course, is really what we're after here.

Maybe on GRX-917, I know SAD/MAD studies are still ongoing, so that the data is still very preliminary. But I guess I'm curious if you can maybe just characterize your overall level of confidence on that program based on what you're seeing both preclinically and clinically so far in terms of the ability for the deuterated form to have comparable or even better PK characteristics, but maintain the pharmacologic effects of etifoxine?

Of course, we are very enthusiastic about this program for the main reason that this compound, etifoxine, the parent, if you will, has been in, I don't know, untold millions of people at this point, right? So their review on safety was over 14 million scripts, but it's been approved. And that was only in France. It's been approved, I think, in over 30 countries at this point. So, lots and lots of experience, lots and lots of use across a range of anxiety disorders. Pre-clinically, we know that this compound and etifoxine and deuterated etifoxine have the same effect in terms of increasing the production of neurosteroids. So, pretty confident on that. In terms of the Phase I itself, it's obviously too early to say. We did the SAD. There's some interim analyses where really we want to get the totality of the trial done before diving in and talking about the results.

Maybe one more for me if I could, and this is, I guess, also for Florian and Greg. It seems like there's a fair amount of capital earmarked for potential additional business development. Can you talk a little bit more specifically about the types of assets or technologies that you might be looking for? Would they be more along the psychedelic side or non-psychedelics? Are you looking more for enabling technologies to augment some of the pharmaceuticals that are in the pipeline, might even consider branching into other disease areas that are within neuroscience and neuropsych, perhaps adjacent to mental health?

Greg, maybe let me go first and then you chime in. So, ultimately, we're very much agnostic when it comes to kind of modalities, the ways that we can improve mental health disorders and ultimately help patients. So, there's no specific focus on psychedelics or non-psychedelics or digital. We're basically organizing our activities along the three strategic pillars that we discussed earlier. So, rapid acting intervention where we see strong neuroplastic effects that we can use to kind of catalyze behavioral change. And then, we're very excited about the digital therapeutics that we have in development currently, basically, both hardware and software to help along the patient journey. And the last one being precision mental health, as we've discussed, and we see great potential and a great use of capital in all those three pillars and also a great ROI for shareholders. Ultimately, we believe that the drug development pipeline itself, we can expand there even further within the scope that we have right now. So, neuropsych is basically what is interesting for us from an indication perspective, and everything that we add should be very complementary. So, we wouldn't add a fifth or sixth 5-HT2A agonist most likely, but not an uncorrelated assets in terms of a risk profile. And that is roughly a summary how we think about deploying capital.

As a footnote there, just to echo that, I think from a financial point of view, there's room in these plans here in our strategy to add to this family of companies. And the screening process that we go through, it's pretty robust and what you'd expect in terms of screening for a strong IP, market potential, value add for shareholders, so that would be the key takeaways.

And for our next question, we have Patrick Trucchio from H.C. Wainwright.

A couple of questions. The first one's just with at least 14 drug development enabling technology catalysts over the next few years, can you tell us which update or updates you believe are underappreciated or perhaps not as widely understood and what the expectations are around those updates?

At least I can start, Florian, and you can jump in. As we just talked about, GABA is really exciting. It's got a lot of previous use history. It sometimes might get a little bit short drift. I think it's really – the Phase I trials and certainly we're going to be kicking off the Phase II a little bit later. Viridia, DMT. Lots of interesting work that's being done on DMT. Really unique profile with our formulation and builds extensively on the data that's been generated with Compass already. So, I think these are some of the things that are of great interest to me, certainly, in terms of moving forward. Some of the digital integration, I think is going to be very exciting. There's going to be a lot of news around that as we move forward as well.

Maybe just to add to this, I think as you mentioned, with more than 14 catalysts coming up, often the focus tends to be on the more advanced compounds. But I think what's exciting about atai is really kind of this diverse pipeline, the diverse pharmacology and the richness in news flow that you mentioned that really provides this nice continuous drumbeat for investors. And so, it's really the totality that is often overlooked because so much is going on that I would like to highlight here.

Regarding the end of Phase III meeting for Compass in April, I'm wondering what atai would consider to be the ideal outcome from that meeting? And separately, I'm wondering how do we think about COMP360 relative to the TRD programs that atai has running? There's PCN-101, RLS-01, VLS-01, and specifically, is there a place in the depression treatment paradigm for all of these treatments, either in the in-home or in clinic settings?

With regard to the end of Phase II meeting, obviously, clearance to move forward into Phase III and agreement on what the Phase III program looks like is going to be key. Right? So, that's a win. That's a win for us. In terms of how these different assets are going to fit together, psilocybin is the furthest along. It's a fantastic asset. We've got great results as we've talked about with the Phase IIb trial. So, that, of course, is one of the key anchors. I always like to think about that being one anchor and S-ketamine being the other. The DMTSs that I was talking about is sort of the second generation in some sense, right? We've optimized the formulation, we've optimized duration of effect. So that's sort of the next thing, obviously, a number of years behind psilocybin, right? It's going into Phase I. We have R-ketamine. Right? So, R-ketamine is totally different in its profile. It's glutamatergic. It's not serotonergic. Probably will pick up a different subset of TRD patients. It's at-home, which of course is a major point of differentiation, probably increases the total addressable market as well. And then, finally, solving RNAs, just unique pharmacologically, psychedelic, psychedelic-like, it's got some very interesting properties in terms of its subjective effects. Our hypothesis is that it will pick up a different subset of TRD population. And of course, all of these also have label expansion opportunities. And they may also be non-overlapping.

Just one last one, if I may. Just on DMX-1002, the Phase I trial, I'm wondering if you can tell us how the doses were selected for this Phase I trial. And in determining the maximum tolerated dose, can you tell us what data is expected to be collected and released later this year and what you need to see to give increased confidence that the safety profile and tolerability can support advancing this program?

Most of the data around ibogaine in terms of efficacy is using doses that are sort of in the seven, eight and above range, right? So, we just started low to understand the compound. So, understanding both the PK of ibogaine as well as its major metabolite, noribogaine. So, that's where we started at 3 and then 6, 9 and 12. So, 9 obviously is a dose that is certainly consistent with previous work that's been done with ibogaine. So, in terms of what we're looking for, of course, it's subject to the fact general safety and tolerability, but not surprisingly looking at cardiovascular parameters. Right? So, there's literature that suggests that there are Qt prolonging effects of ibogaine. Again, we're fully cognizant of that. But we want to characterize that, characterize it in the context of this patient population, in the context of in-clinic treatment, right, medically supervised treatment in a condition that has significant morbidity and mortality. So, that's the sort of balancing act we're looking at and that's what we'll be reporting out on.

I think we'll have time for one more question from Sumant Kulkarni at Canaccord Genuity.

Nice to see all your progress. I have a quick question on the pipeline. On DMX-1002, what are the specific variables that are leading to the safety data now coming later this year was earlier? And the second is actually a two-part strategy question. Christian mentioned two things. One is your first mover advantage. And second, your commendable goal of becoming a household name for treating mental health. On the first mover advantage, what are the key gating factors from bringing the entirety of Compass in-house given the significant first mover advantage that company enjoys currently? And then the household name component, it appears that several of your products might require clinical infrastructure to administer? What are your latest thoughts on perhaps starting some dry runs on that side by investing in clinics? Or is that something that is not at all in atai's plans?

Let me touch on the DMX – the ibogaine questions and then I'll turn it over to Florian to answer some of the others. So, I had mentioned what the key variables are with respect to what we're looking for in the Phase I. We're looking for subjective effects that are consistent with sort of the history, right? So, this psychedelic, a narrow phrenic type experience, which seems to have an important – seems to be very important for efficacy. So, that's the first thing. And then, it's all about risk benefit. And is a cardiovascular – the changes on Qt, for example, are those acceptable for the context that I provided. So, that's really what we're going to be looking for. Well, we're picking a dose from that Phase I SAD and then we're moving that forward into Phase II, which, again, is double blind, placebo controlled, two-arm, looking at urine-confirmed abstinence or at least [indiscernible] reduction going forward?

I'm happy to take the second part of your question. In terms of first mover advantage, we were – starting out in 2017, with Compass 2018 with atai, we had a chance to look at many, many compounds early on where psychedelic medicine was not as prevalently discussed in the neuropsy community and also among investors. So, we had a good chance to look at all compounds that we believe based on all the data have a commercial potential and also a solid avenue for patentability. So, that was basically where we were excited and also, of course, the science, so the scientific data that came out. And that's how we basically assembled our pipeline on the psychedelic side. But as you know, we are also very active in the non-psychedelic compounds and the digital therapeutic side. On the question around clinics, we believe that our strength and also our deep domain expertise in CNS is really drug development in CNS. That's where our core expertise lies. And that's where we also intend to focus going forward. That doesn't mean that we not entertain discussions with infrastructure providers. I think that is key to be very early, to think about scaling those therapies. Also, how our digital therapeutics tie into this? So we will be very much thinking about how to best scale those therapies in a safe and responsible way. But as of now, we don't envision to move towards brick and mortar or running clinics.

Thank you all for your questions, including those that we didn't have time to get to. As we are approaching the end of our allotted time, I'd like to turn the call back over to Florian for any closing remarks.