FTRP - Field Trip Health Ltd. (FTRP) CEO Joseph Del Moral on Q1 2023 Results - Earnings Call Transcript
Field Trip Health Ltd. (FTRP)
Q1 2023 Earnings Conference Call
August 16, 2022 8:30 a.m. ET
Company Participants
Kathleen Heaney - KCSA Strategic Communications
Ronan Levy - Chairman and Chief Executive Officer of Field Trip Health & Wellness
Joseph Del Moral - Chairman and Chief Executive Officer
Donna Wong - Chief Financial Officer
Nathan Bryson - Chief Scientific Officer
Conference Call Participants
Andrew Partheniou - Stifel Nicolaus
Patrick Trucchio - H.C. Wainwright
Sumant Kulkarni - Canaccord Genuity
Presentation
Operator
Greetings, and welcome to Reunion Neuroscience Inc. Fiscal First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn this conference over to your host, Ms. Kathleen Heaney, from KCSA. Thank you, ma'am, you may begin.
Kathleen Heaney
Thank you, Laura. Good morning, everyone, and welcome to fiscal 2023 first quarter earnings conference call for Reunion Neuroscience Inc., formerly known as Field Trip Health Ltd. As the company has completed its reorganization, today's discussion will focus on Reunion; Field Trip & Wellness will hold a separate call later this month.
Before we begin the call, I am obligated to remind everyone that, during the course of this conference call, management may be making some forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These results are outlined in the Risk Factors section of the company's filings and disclosure material. Any forward-looking statements should be considered in light of these factors. Please also note as Safe Harbor, any outlook presented is as of today, and management does not undertake any obligation to revise any forward-looking statements in the future.
Presenting today will be Ronan Levy, who has stepped into the role as Chairman and CEO of Field Trip Health & Wellness, additionally, he will continue to serve as a member of the Board of Directors of Reunion; Joseph Del Moral, Chairman and CEO of Reunion; and Donna Wong, CFO of both Reunion and Field Trip Health & Wellness will be presenting.
I'll now hand the call over to Ronan, who will provide an update on the corporate reorganization.
Ronan Levy
Thanks, Kathleen, and welcome everyone. Thank you for joining us this morning. I will begin my presentation with an update on the corporate reorganization. Joseph will discuss the drug discovery business followed by Donna, who will discuss the quarter's financial results. We will then open the call to your questions.
On June 27, we received shareholder approval for the spinout of Field Trip Health & Wellness, and on June 29, we received court approval. Last Thursday, the spinout became effective, and the NASDAQ and TSX-listed company was renamed Reunion Neuroscience Inc. The TSX Venture Exchange has now granted final listing approval for Field Trip Health & Wellness, and we expect that Reunion and Field Trip Health & Wellness will begin to trade independently, on August 17. Field Trip Health & Wellness and Reunion are now two distinct companies with separate management teams and boards of directors. Reunion Neuroscience remains listed on both the NASDAQ stock market and the Toronto Stock Exchange, and will trade under the symbol "REUN", while Field Trip Health & Wellness shares will trade on the TSX Venture Exchange under the symbol, "FTHW".
It's been a long process, and we are pleased to be moving ahead. The timing was right as both divisions were ready to operate as individual companies and emerging leaders in the psychedelics industry, one providing psychedelic-assisted therapies, and the other developing next-generation psychedelic drugs. We believe the decision to split the companies is in the best interests of both organizations and our current and future shareholders. Reunion will continue to focus on the research and development of novel psychedelic molecules such as RE104, formerly known as FT-104, while Field Trip Health & Wellness will continues its focus on developing and delivering innovative psychedelic-assisted therapies.
In connection with the closing of the arrangement, Field Trip Health & Wellness completed a series of private placement financings for gross proceeds of $19.9 million, led by Oasis Management Company and Reunion. We expect this to be sufficient for us to execute on our strategy at Field Trip Health & Wellness and position ourselves as a leader in this emerging and exciting field.
I will now hand the call over to Joseph to provide an update on Reunion's drug discovery programs.
Joseph Del Moral
Thank you, Ronan. During the quarter, Reunion continued to develop innovative synthetic molecules targeting the serotonin 5HT2A receptors, hitting some exciting milestones. In July, we announced the first successful dosings in our Phase 1 Clinical Study of RE104, formerly known as FT-104, being undertaken in Australia. This is an important step in our work to develop RE104, our first molecule under development as a potentially fast-acting treatment for postpartum and treatment-resistant depression with durable efficacy. The study aims to examine, over a range of dosage levels, the safety, tolerability, pharmacokinetics, and pharmacodynamic effects of RE104.
Subjective measurements being analyzed include the intensity, duration, and feelings produced by the period of acute psychoactivity after dosing with RE104. We expect to report results from the study in the fourth quarter of calendar year 2022, and are planning to seek FDA guidance on Phase 2 studies which are planned for 2023. In April, we were granted a patent for claims related to RE104 entitled, "Tryptamine Prodrugs," granting Reunion exclusive rights, until 2040, for the composition of matter, formulations, methods of use, and methods of manufacture for a family of hemi-ester compounds of hydroxytryptamines, including Isoprocin.
We are also making progress with the research and development of our RE200, formally known as FT-200, Molecule Group, strengthening our IP portfolio while also seeking the optimal lead candidate for preclinical development. We have filed two provisional patents with the USPTO for the RE200 family to protect the compositions, potential formulations, and uses of the molecules. I am proud of the efforts made by our team which have resulted in Reunion being one of the first companies to have entered clinical trials with a novel patent-granted psychedelic molecule. Entering our next chapter as a standalone company, we will have the singular focus and the resources to execute on our clinical development program for RE104, and continue advancing our RE200 pipeline.
I will now turn the call over to Donna to discuss our financial results.
Donna Wong
Thank you, Joseph, and good morning, everyone. As a reminder, all figures that I will be discussing are in Canadian dollar, and the first fiscal quarter of 2023 corresponds to the three-month period, ended June 30, 2022. With the corporate reorganization complete, our financial results from continuing operations reflect Reunion only. On our P&L, Field Trip Health & Wellness, or the Clinic Operations, are excluded from the results of continuing operations and are presented as a single amount as a net loss after tax from Clinic Operations. Net loss from continuing operations for Reunion in the first quarter was $5.2 million, compared to a net loss of $3.4 million in the same period of the prior year.
The increase in net loss primarily reflects an increase in operating expenses from $2.7 million to $5 million, driven by a more than doubling of our research and development costs from $1.4 million to $2.9 million, and higher general administration costs primarily related to public company expenses. During the quarter, we continued to ramp up on our RE104 development costs, and as you have just heard from Joseph, we entered Phase 1 Clinical Trial and began preparing for Phase 2. With respect to our financial position, Reunion had unrestricted cash, cash equivalent, and short-term investments of $52.3 million, at June 30, 2022, which included $4.1 million held at the Clinic.
Upon closing of the spinout transaction and after its $9.8 million investment in Field Trip Health & Wellness, on August 11, Reunion had approximately $40 million in opening cash which we believe is sufficient to support our ongoing drug discovery work. As Field Trip Health & Wellness, we'll host a separate earnings call later in the month. I will make a few brief comments here. During the first quarter, the clinics earned patient services revenues of $1.8 million, an increase of 110% over the comparative quarter in the prior year, and 6% sequentially quarter-over-quarter. There were 12 clinics in operation during the quarter, compared with six in the same period of the prior year.
Field Trip Health & Wellness reported a net loss during the quarter of $8.2 million, compared with a $9.1 million loss in the same period of the prior fiscal year. This decrease was primarily due to increased revenue and a more favorable foreign exchange rate partially offset by the increase in operating costs due to the larger number of clinics in operation.
This ends our prepared remarks. I'll now ask the Operator to open the lines for the Q&A session.
Question-and-Answer Session
Operator
At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Andrew Partheniou with Stifel. Your may proceed with your questions.
Andrew Partheniou
Hi, good morning, and congrats on all these milestones.
Joseph Del Moral
Thank you, Andrew. Good morning.
Andrew Partheniou
Maybe starting off with a little housekeeping question, Donna, could you outline any kind of onetime costs for Reunion or Field Trip Health & Wellness in the quarter?
Donna Wong
The Reunion results reflect pretty much recurring costs associated with the R&D development for RE104 as well as our RE200 Group. With respect to Field Trip Health & Wellness, we had approximately $12 million in operating expenses for the quarter, of which $3.4 million were nonrecurring, $2.4 million related primarily to the spinout transaction, $1 million related to an impairment of fixed assets which are disclosed in our financial notes, and it reflects the impairment on our construction in progress as a result of our decision, which we previously announced, to defer the opening of our six clinics.
In addition, there was approximately $2 million in non-cash operating expenses related to depreciation and amortization and share-based compensation expense.
Andrew Partheniou
Appreciate that. And maybe transitioning to Reunion here for a moment, your 200 series, you filed two patent applications. Wondering if you can talk a little bit about what you found there and what you're still looking for in -- as you explore other molecules to select the final candidate?
Joseph Del Moral
Thanks, Andrew. We'll hand that over to Nathan.
Nathan Bryson
Good morning, Andrew. And the 200s, I'd say it's still extremely early and very exploratory, but what we are looking for and what we found now is, I'd say, two families of molecules that respond to our initial criteria, that were improve selectivity of targeting the 2A receptor which is the one that's responsible for the hallucinations but also the antidepressant effects of something like psilocybin or FT-104, we hope in the future to demonstrate that. But having the selectivity improved for the 2A receptor relative to the serotonin 2B receptor which is the one that has cardiovascular liability that was put in evidence by -- [since learning] [Ph], back 20-30 years ago.
So, what we're trying to do is improve that selectivity. We've got two families that do that, including one family and -- that has multiple examples of compounds that are actually antagonist at the 2B receptor while being very potent at the 2A. So, we've been fleshing out multiple structures to build out a patent portfolio so that we can protect ourselves. Before we start describing too much about the molecules that we're actually doing, we'd like to get those patents filed and protect ourselves first. So, that's -- I mean, that's pretty much the process.
We're going down the path of looking at multiple behavioral assays, expanding on the pharmacology looking for off-target assays that might be a liability or a benefit to the drug product, looking at whether they induce a head twitch, things of that nature; standard assays that you might put around the serotonin 2A receptor, plus expanding a little bit more toward behavioral assays to see if there's particular aspects of the drug that might be beneficial to helping us understand where these might be the best candidates for use in a particular indication.
Andrew Partheniou
Thank you very much for that. And maybe a question on the clinics, to the extent that you're comfortable discussing, could you talk a little bit about the ramp that you're seeing in this current environment? And more notably, your earlier, older clinics, could you talk a little bit about how they're performing and did you see any kind of acceleration as the clinics mature?
Joseph Del Moral
For that we'll go over to Ronan, Chairman and CEO of Field Trip Health & Wellness.
Ronan Levy
Thanks, Joe, and hey, Andrew. What we're seeing with the clinics ramp is as before, the older and more mature clinics continue to move up that curve relatively at a faster pace than the younger clinics, so they continue to seek greater engagement, which is self-reinforcing, so Toronto, New York, L.A., those clinics tend to grow the client base and the patient base at a faster rate than the smaller clinics. But overall, we're seeing an increase -- a significant increase in enquiries an questions coming in, where we can almost measurably see the impact of the release of How to Change Your Mind, on Netflix, and the days and weeks, and that continues afterwards, the number of enquires and leads we're generating increased significantly relative to our normal steady state.
So, as demand continues to increase and that continues to move up the curve, there certainly seems to be an element of seasonality involved in interest. The interest goes up, but converting people into clients, that point seems to be a little bit of a slower process during the summer month. So we expect, as we head back into the fall, we'll see a relative acceleration of revenues.
Andrew Partheniou
Thanks for that. I'll get back in the queue.
Operator
[Operator Instructions] Our next question comes from the line of Patrick Trucchio with H.C. Wainwright. You may proceed with your question.
Patrick Trucchio
Thanks. Good morning and congrats on all the progress and getting separation completed. I have a few follow-ups on RE104. First, I'm just wondering if you could discuss what you would anticipate to be the potential advantages of RE104 over psilocybin and these other short or long-acting psychoactive substances, and what data specifically do you expect from the Phase 1 that would help you to better characterize those differences?
Joseph Del Moral
Thanks, Patrick. Let's go to Nathan for -- just to answer on it.
Nathan Bryson
Morning, Patrick. I would hope we all know the advantages by now, and that, most of them, we're trying to demonstrate into the Phase 1. So that the first -- I think the first and foremost is having a short-acting, I say -- excuse me, a short duration of psychoactive experience. We're hoping to see something in the order of two to three hours, that gives us the possibility of having people in and out of the clinic in half-a-day, compared to something like psilocybin which is a full-day, and you could only use the room or the chairs once during the day for the treatment. So, we hope to be able to double the capacity in the standard clinic.
And the second thing was to have intellectual property. We're, as Joe highlighted in the initial statements, we're one of the first companies out there to actually be doing clinical trials with a patent-granted molecule. We pushed our molecule through the USPTO on a fast-track and got granted the patent in April. And so, that that's really important, going forward, to be able to have market exclusivity and/or be able to partner with big pharma if they want to come looking because they want to be able to protect that market exclusivity for a certain amount of time. And with this clear patent, we have exclusivity out to 2040.
In addition, for the Phase 1, what we're really trying to see is that duration of experience. And then we're doing this one for a range of doses. This is a single ascending dose, so we're starting at low doses, going up, looking for a range of doses that are tolerable and safe that we can, of course, explain the pharmacokinetics and the subjective experience on. But that range of doses will help us to select doses that we'll be using going into Phase 2 study. So, that's the design of all the subjective measures that we're doing, including the mEq and the measure of intensity of experience, which can tend to correlate to antidepressant effects.
Patrick Trucchio
Yes, that's helpful. And then just in the press release there, refers to Phase 2 studies to be initiated in 2023 following guidance from the FDA. So, I'm wondering can you tell us what you would expect to be the key questions, presumably, of course, you need the data from the Phase 1, but can you give us a flavor of what you would need answered by the FDA regarding Phase 2 studies? And how many Phase 2 studies are planned and in which indications?
Joseph Del Moral
It's a bit early to be talking about what the Phase 2 questions might be right now. We have put together a study synopsis that we started to share with potential CROs for the study. And we are working right on building the full protocol. That protocol work is going with our advisory team that you can see on our Web site. And they would help us design the questions. I mean we'll go around that Phase 2 protocol when we are in the IND. So, they will be around design of the study. They will be around how we choose the dose, and how many doses and what dose strength, and it will be bit about, of course, how much psychotherapy we might add or not add, but those questions we haven't formally formulated yet.
Patrick Trucchio
Yes, that's helpful. And then just one last one if I may, just on the digital therapeutic side, how are they expected to become part of the program? Or, they part of -- is there some aspect of the Phase 1 protocol that includes the digital part, or would that be more reserved for Phase 2 or 3 trials?
Ronan Levy
It's back to me again. For the Phase 1, we are not using digital. We are not working with patients. And so, we are not actually doing therapy, although we are -- how would I say this, putting our patients in somewhat of cocoon -- in a protective chamber if you wish. They are being treated as if they were patients in separate rooms individually right now. So, just to be able to be sure that we are in full control the environment for them and keep them safe. I think the digital aspect, right now we haven't yet made any formal decisions yet about how heavily we will rely on digital when we get into clinical trials. More likely than not, it would probably be something we would look closer as we get closer to Phase 3 than in Phase 2. But I will be sure that we discuss this when talk with our Advisory Board and we start thinking about our first interactions with the FDA.
Patrick Trucchio
Great. Thank you very much.
Operator
Our next question comes from the line of Sumant Kulkarni with Canaccord. You may proceed with your question.
Sumant Kulkarni
Good morning. Thanks for taking my question. I have just one - could you remind us on why you chose the subcutaneous formulation for RE104? And what are the actual volumes of product that needs to be administered subcutaneously for the different doses that you have taken -- you have in your chemical trial?
Ronan Levy
So until we know the dose, I can't tell you exactly what the volume will be. But right now we are anticipating the volumes to be significantly less than or up to 1 ml. So, quite small and not painful, we don't expect that to be a problem with -- this formulation is extremely fluid and can go through a very, very fine needle. Almost like a needle that you might take for a vaccine or for insulin. So, that should be not too much of a problem. We chose the subcu route of administration in order to standardize the trip, to not be beholding to variations in gastric absorption, GI absorptions, and changes to the pharmacokinetics and pharmacodynamics. That we can have better control over the profile -- how is the psychoactivity and profile of the trip which we can see -- obviously when we did early studies in rodents, reproduced the ability in terms of where Cmax is and where the end of the trip is.
It is much more reproducible than one would expect from an oral administration. And that means from a clinic perspective, you can time the duration that the person is in the chair or in the clinic. You can time the music so that it -- peek experience happens with the right kinds of music as we start to delve into that aspect in the treatment of the patient. And you can be sure how your patient flow is going to work in the clinic. And because this is going to be only a clinic-administered drug, we don't currently expect this to be administered at home.
Administration with a syringe is not that much of a problem. And also there are other aspects like taking oral drugs like this often lead to vomiting. And through the subcu route, we might be able to reduce that, and make sure that the dose stays onboard, and that the dose is not vomited up during a trip. That way we can be sure that the proper dose is administered, people will go back and doing a second dose and things like that. It happens sometimes when we administer things orally in this nature. So, those are some of the primary aspects of why we chose subcu.
Sumant Kulkarni
Got it. Thank you.
Operator
Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. Ronan Levy for closing remarks.
Ronan Levy
Thank you, Operator. And thank you to our investors and analysts for the ongoing support. I also want to extend a personal note of gratitude for your ongoing interest and support as this will be my last Reunion earnings call. I look forward to seeing you all on the Field Trip Health & Wellness earnings call going forwards. Goes without saying, we are excited about the future for both Reunion and Field Trip Health & Wellness with Reunion well-placed to progress novel psychedelic developments and Field Trip Health & Wellness well-positioned to continue leading in the delivery of psychedelic-assisted therapies. Our passion to develop effective treatments for mental disorders is only strengthened by the new opportunities that the company split presents. Moving forward as separate companies, we are confident we will be able to build value over long term for both businesses as well as for our current and future shareholders.
With that, I'll ask the Operator to close the lines.
Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
For further details see:
Field Trip Health Ltd. (FTRP) CEO Joseph Del Moral on Q1 2023 Results - Earnings Call Transcript