New Hope for People Battling With Depression

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1:47With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Remember when psychedelics were like all the rage? Totally. We've been talking about them for a while. And then they weren't, because in 2022, we saw prices collapse, money was pulling out, trial results weren't where they needed to be. It's having a resurgence. According to Bloomberg intelligence analysts, they're estimating that the psychedelic drug market could grow to$7 billion by 2032.

2:33That's a decent market. Yeah, yeah, yeah. So the market potential here, they say, is clear. But companies could still run into issues with regulators, as we know, and in upscaling the products. So back with us here in studio, which we're so happy about, is Kabir Nath, Chief Executive Officer of Compass Pathways. And so great to have you back. You were here last in July, Kabir. That's right. And it's great to be back. Thanks for the invitation. So tell us, first off, just a little background for folks. This is your company, Compass Pathways,$515 million market cap. Not too shabby. Stock is up 42 % year to date.

3:05We know there's a lot of volatility in this industry, too, but that's not too shabby either. Tell us what's changed since you were in our studios in July. Thank you. So we're excited about the fact that we're now in a position to potentially accelerate getting this medicine to patients who so urgently need it. Let me remind you that there are three million patients living with persistent depression in the U.S. Fewer than five percent of them today are treated with a medicine that was actually specifically studied for or is approved for treatment resistant depression. And this is depression that is chronic.

3:37It's refractory. Often people are unable to work. It has dramatic direct health care costs in terms of costs of emergency room admissions, in psychiatric care, but it also has real social costs for these people. So what's changed is we've had a really excellent conversation with the FDA about their desire to see, subject to us continuing to produce really strong results in terms of efficacy and safety, their desire to see this move more quickly. We've completed the enrollment in our second final stage study, which we did ahead of expectations, which is really down to the great -

4:13Kabir Nath:So this is a phase three? This is a phase three. This is the second of our final stage studies. We've completed the enrollment of that. We expect to have the primary data from that in first quarter of next year. That will give us the second of our final stage studies. And with that, we are actually excited to be able to submit that to the agency and look to an accelerated approval. Wow. That sounds like a really big move. I'm curious, just remind us, and we were talking with our healthcare team, how you guys designed the trials or research program to avoid some of the pitfalls that we've seen with, I think about the ecstasy and the MDMA drug application that was for PTSD.

4:51Kabir Nath:How did you guys avoid some of those pitfalls? So first, we had the opportunity to learn from some of the lessons. We've been in an excellent dialogue with the FDA now for some six or seven years since we first started this. since this process. Yeah, as we know, developing new medicines takes a long time and a lot of commitment. We've done this in a very robust and rigorous way. We are collecting full side effect data. We're collecting all the issues, not just potential side effects such as headache and fatigue, which are transient, but also things like liking and so on to make sure that there is really no abuse potential for this.

5:29And we've been collecting that right from the get-go.

5:31Kabir Nath:Is there any abuse potential for this? There is no history in psilocybin of people actually seeking it out or any abuse potential with psilocybin, which is an important point. I'm putting my investor hat on for a moment, and I need to ask you about intellectual property and how you handle something like that, because psychedelic compounds don't sort of fit comfortably into that compound, if you will, because a lot of them are natural. They can't really be patented, if you will. So how do you deal with that? And to what extent is your medicine, you know, hold patents or have intellectual property?

6:01So our medicine, Comp360, is a fully synthetic formulation of psilocybin. We have polyphomorph patents that address that, and therefore we have robust protection until 2038 with the potential for extension around that. Because, again, we went for a fully synthetic modern medicine.

6:19Kabir Nath:Have you talked directly with the Health and Human Secretary, Robert F. Kennedy? We are focused on an excellent relationship with the psychiatry division of the FDA. We've been working with the same folks for seven years. He has certainly made some commentary around this that has given hopes and expectations that this would move along more rapidly. We're happy that there are senior figures in the administration who believe like us in the potential for psychedelic therapy. But we're really focused on delivering the right efficacy and safety through our studies and working directly with the division that's going to approve us.

6:56So trial three, third phase next year, early next year. Give us an idea of a timeline. I mean, when might we see something like this come to market? We will get the primary data, as I said, in first quarter of next year. Right. We will need to submit some more data later in the year. But we are looking forward to being in a position to complete a submission to the FDA in the latter part of next year. And then we'll work with them as expeditiously as possible on a potential regulatory approval.

7:23Kabir Nath:So, um, 2026, 2027, like what's, I know this stuff all takes long and I know we constantly am asking you, but I think because it's been so much out there for a while, a decade and then some, right. I think we're all trying to certainly for an investing audience, understand when this actually hits, hits the market. We are preparing to be ready for a commercial launch from the end of 2026. Ah, you said it. Well, thank you. What is something like this? Yeah. What is something like this cost? That's the question. So it's premature to discuss the pricing for this at the moment. First, we actually still need to see some of the longer term results from our studies.

8:00In particular, we need to see over the course of the first six months what the potential for a second dose is and really, therefore, how many potential sessions that a patient may need to have in a given year. That's a great question because you're talking sessions. So this is not a drug that someone would continue to take or a lifelong sort of drug, if you will. Absolutely. And it's a really important point there. What we have shown in our studies so far is that a single session can produce a dramatic response that lasts for six weeks. Today, either it's a daily oral or there is a product, esketamine, which you will need to take maybe 30 to 50 times a year.

8:42What we are showing is truly transformative, therefore, for these patients with this infrequent sessions.

8:47Kabir Nath:We're talking with Kabir Nath. He's chief executive officer of Compass Pathways, ticker is CMPS. He's here in our Bloomberg studio, Bloomberg headquarters. Kabir, one of the things I think about then is if all goes as you anticipate, and you've talked about the market for like who this is for specifically, then do you move on to other uses and other treatments, whether it's PTSD, whether it's drug addiction? Like, I'm just curious how far you can go with this. Yes, thank you, Carol. And we are designing, have in fact already designed and finalized the design of a study in PTSD. PTSD affects 13 million people in America.

9:28And while there's this view that it's prevalent among veterans and so on, it absolutely is. That's actually only around 15 % of that population. Only 15%. 15%. Actually, 60 % of people suffering with PTSD are women. And so this is a very large population. the only two drugs medicines approved for PTSD were approved in the last century. So this is something new, something different. And so we are very excited about that. We have designed a study and that we will be kicking that off next year. I want to go back to the question of price. Sure. What about insurance and how does that play a part in all of this?

10:06From the get go, Compass was set up in order to ensure broad and equitable access for patients. And that means the ability to work with insurers, both commercial and government. With the data we've already shown, as I say, a single administration producing statistically significant reductions in depressive symptoms after six weeks, we've already started to demonstrate the value that this can bring to the healthcare system. Patients living with persistent depression frequently end up in the emergency room. They sometimes have inpatient psychiatric care. there are direct costs to healthcare systems, and we have already started to demonstrate the value.

10:43Kabir Nath:You know, and forgive us, Kabir, we do keep going back to, I know you can't talk about price, or your guys are just figuring that out, but we kicked off saying, according to our Bloomberg intelligence team, that this market, psychedelic drug development, could go to$7 billion in sales by 2032. How much of that do you think is, or how much of that market size do you think you could get? And I'm just trying to, I'm curious. So we have the potential to be ahead of other companies in this market by two to three years. And we're excited about the opportunity to treat lots of patients. So for us, this is about the ability to make inroads into those 3 million patients that need a new treatment option.

11:26The only medicine that's actually approved and is being really promoted for this population today is treating maybe 70 ,000 to 100 ,000 patients over that population of 3 million.

11:37Kabir Nath:Right. So what we're excited about is the ability to bring this new medicine to those patients. Is it a billion-dollar drug? Would you anticipate? We would hope that if we can successfully treat a large number of patients. Especially if you get and you expand out. Do you go for other uses? Yeah. Do you go alone? That's our intention. We've always said clearly that we believe that we can do this on our own in the U.S. market, and that's our intention. All right. What about side effects? I mean, folks are listening to this. A lot of folks are hoping that this is all going to work and come to market sooner rather than later.

12:12What are some of the side effects, though? So on the day of dosing, there's some headache, some nausea, and that passes by the second day at most because this is a day in a treatment center. We have a fully independent group of scientists and clinicians that reviews all our safety data on a regular basis. They have access to data from all arms of our studies. And they have seen no unexpected or concerning side effects that have caused them to alter the course of the study in any way.

12:41Kabir Nath:And just remind everybody, and we've just got about 40 seconds, Kabir, right? When it is given to a patient, there are folks around to really watch the process, make sure things go safely. You're not taking this in your bathroom by yourself. No, this is very much delivered in a safe environment, in a medical environment. With somebody in the room who is medically trained, who's there just to assure patient safety and comfort? Do you see the finish line? I absolutely do, and we're excited about that potential. I just think how long we've been reporting on it and talking about it, it's really fun to kind of be on this journey somewhat with you.

13:14I'm just wondering quickly, regulatory hurdles in 2026, do you think that it's going to be a more friendly regulatory environment? with the psychiatry division, we have an excellent relationship. And that's been consistent over six, seven years. And we expect that.

13:28Kabir Nath:Yeah. Sounds like you've been talking to them for a long, long time. Kabir, thank you. Nice to have you in studio. Kabir Nof, he's chief executive officer of Compass Pathways joining us right here.

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