COMPASS Pathways plc (CMPS) Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the CPT III Code Language Discussion conference call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Stephen Schultz, Senior Vice President of Investor Relations. Please go ahead, sir.

Yes. So good day, and welcome, everyone, and thank you for joining us for this program on the newly issued CPT III Code language. Again, I'm Steve Schultz, Senior Vice President of Investor Relations at COMPASS Pathways. Before we begin, let me remind everyone that during today's event, the team will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended including statements about our commercial plans and potential reimbursement and our ability to obtain regulatory approval to launch and successfully commercial COMP360 psilocybin therapy. You should not place undue reliance on these forward-looking statements. Actual events or results could differ materially from those expressed or implied in any forward-looking statements as a result of various risks, uncertainties and other factors including those risks and uncertainties described under the heading Risk Factors in our filings with the SEC Additionally, these forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements even if our estimates or assumptions change. Also, please note that the opinions of our guest is theirs and not necessarily that of COMPASS Pathways. At the conclusion of this call, we'll take questions. And at the conclusion of the program. If we are unable to get all the questions in, or you would like a meeting with management, please reach out to me directly. With that, I'm pleased to introduce Kabir Nath, COMPASS Pathways' CEO.

Thank you very much, Steve, and let me add my welcome to everyone for joining us for today's webinar. On the recently released language of the CPT III code. This code, as you know, is for continuous in-person monitoring and intervention during psychedelic medication therapy. As you know from our recent press release, this code will go into effect and will be published in the CPT manual from January 1, 2024. You might be surprised and think it's a bit hyperbolic that we described the creation and approval of something as apparently mundane as a CPT code as exciting, but we truly are excited by this development. This code is going to play a crucial role to facilitate reimbursement and support broad and equitable access to psychedelic treatments if they receive regulatory approval. This is critical for people who are in urgent need of new options for difficult-to-treat serious mental health issues such as treatment-resistant depression and anorexia nervosa and post-traumatic stress disorder. So we're delighted also to welcome to this discussion today to esteemed guests from both the payer and the provider communities, and I look forward to the discussion. So with that, let me now hand over to today's moderator, Chris Williams, our Chief Communications Officer, here at COMPASS Pathways. Chris?

I think we're having a bit of a technical difficulty there. I'll proceed... [Technical Difficulty] My apologies for that. Engineer, can you disconnect that line, please? Well I hope it's disconnected now, again, apologies for that. We are having some technical difficulties today. But we want to introduce our panelists. We have Dr. Geoffrey Grammer, Chief Medical Officer at Greenbrook TMS Centers who represent provider point of view. I hope we have Dr. Marketa Wills right now, Chief Medical Officer at Johns Hopkins HealthCare. who will offer a payer's perspective on the CPT III code. We've had some technical difficulties getting Marketa connected today. So we'll see if she's able to participate as planned. And then finally, we have Dr. Steve Levine, our colleague here at COMPASS Pathways, who is Senior Vice President for Patient Access and Medical Affairs. Let's get into the conversation right away. And I think what I better view is start by first putting a question to Steve, since I know I have them here in front of us and he can hear me. Steve, can you briefly remind us what CPT codes are and what role they play in the delivery of health care in the United States.

Thank you, Chris. Yes, I can hear you. And CPT codes are a common language for doctors and other health care professionals to describe and report medical services and procedures accurately and efficiently to facilitate reimbursement by payers. Essentially, anytime health care providers and patients interact, CPT codes are involved.

Great. Thanks, Steve. Geoff, let's go to you. We're curious to get your kind of high-level take on the language of the CPT III code for psychedelic therapies now that it's been released. From your perspective, as a provider, why don't you tell us a little bit about what having the CPT code means and how it'll create access for a therapy for patients? What is the [indiscernible] for you in your centers?

Yes. I mean this is a big step because when you're doing a treatment modality that requires observation after administration of a compounder substance, you need to be able to model some method of doing that. So the drug is one expense, and that has its own pathway towards coverage, but a big piece of that is going to be some sort of compensation for the facility or a provider who is overseeing that administration. Without both of those things satisfied, you can't create the systems needed to deliver the treatment to the patients who need it.

And Geoff, let's stay with you. Can you give us a recent example where not having a code that would have this kind of language made it difficult or maybe even impossible for you to deliver an approved therapy because there wasn't any existing code that you could work with?

Yes. Thank you. I mean it's interesting. So Greenbrook TMS has 133 centers around the country, and we sort of specialize in taking treatment modalities and bringing them to the patients who need it. And when we think about the barriers to that, I usually think of three things that need to be satisfied. You have to have awareness. You have to have some geographic proximity to be able to access that modality such while we have centers in a lot of places. But the third piece is the fiscal viability. The reality is most patients who would need this treatment cannot afford sort of a fee-for-service cash-only model and it keeps them financially separated from that treatment. So if we go back to both TMS, just transcranial magnetic stimulation and Spravato, we saw launches of launches for both of those that were in a way stagnated, probably worse with TMS because all those things weren't necessarily satisfied. It was unclear where they were kind of deploying these devices, who's going to be doing the treatment delivery and how those will be coded and build. And so without that CPT code, you can't begin to even talk with payers to come up with a model for compensation that makes this sort of viable, if you will. And with Spravato as well, we saw trying to take existing codes and mesh it to what was a very unique treatment and it took a while to kind of figure that out. By doing this on the front end, and making it specific for this treatment modality, I think one, it speaks to just how revolutionary this is going to be; and two, it allows you to do that prep work so that when or if you have approval on launch day 1, you already have all those systems in place that people then don't have to invent for the first time. So it is going to accelerate the deployment and the adoption of this much more quickly than I think we have seen with other novel treatment modalities.

Great, Geoff. Marketa, are you on the line now? It seems as though we don't have Marketa, still having some technical challenges there. We apologize for that. So maybe let me build off of what we just heard from Geoff and turn to Kabir and Steve. Steve will start with you as our formal panelist. Can you talk a little bit about the COMPASS' perspective on this then, looking ahead to a potential commercial launch for us in COMP360 psilocybin treatment. Why is this code important for us?

We're focused not just patient access for those who may benefit from COMP360's dose therapy, if approved, and among other factors in creating that access, the delivery of the psychological supports must be financially viable for health care providers. So this is a critical step for patient access and commercially and really a proof point if this is possible.

Kabir, anything you want to add to that?

No. I think what I would add is also, I think what's really important is what Geoff noted, which is doing this work so far in advance is really enabling us to be in a place where the infrastructure, the ability to actually deploy this code and ultimately potentially have it as a reimbursable code. By the time the launch is really, really important. And again, I think it's a great example of where, as we say at COMPASS, we've designed things from kind of the end state back to make sure we're ready for that commercialization if we are indeed approved.

Great. Thank you, Kabir. Let me try again to see if we have Marketa. So far, been a fairly glitchy conversation, which is no fault of yours. We're glad that we're able to finally get you into the conversation. And just in the nick of time, as I have a couple of questions for you. So if you're ready, I'm going to fire away.

I am ready. Thanks for having me on this morning.

Great. So let's -- I'm going to throw to you the same question that I started off with -- on with Geoff, which is to just get your perspective at kind of a high level about the approval of the CPT III code for the administration of psychedelic treatments. And what's your reaction to it? And maybe you could also tell us a little bit about when you see a code like this a new code, what is it that you're looking for? And what are you looking to track?

Yes. Thank you so much for the question and the backdrop. Here in the plan setting, when new codes are released, particularly the CPT III code, we have a team of folks who really go in and comb through the literature, the evidence to really understand how to price through investigational, experimental and yet to be released in the managed care setting. Our main touch competitive landscape touch point is often CMS and Medicare. We keep a close eye on the competitive landscape around codes and pricing. But as new CPT III codes emerge, we're often eagerly anticipating how we'll process through investigational, experimental and yet-to-be-released modalities against all of our other offerings from the plan.

Marketa maybe if you could pick up on this theme of kind of flexibility and granularity in the code. What does that facilitate for a payer?

Yes. As we think about what all is included in the code, whether or not services are bundled or disaggregated, it allows us to more appropriately price for the services in under consideration. So to the degree that various pieces can be bundled or pulled out, it allows us to really think through alternatives versus alternatives to treatment. I think another important point in this particular offering that we're excited about is that we know that treatment-resistant depression really impact the degree to which other physical health modalities are addressed and physical health conditions are addressed and taken care of. So our numbers show us over and over again that if someone has treatment-resistant depression and has, for example, a cardiac condition, the costs are going to be much, much more. So when we think about the actuarial consideration around pricing we take into account the total cost of payer. So, we are very excited about this coming forward to the benefit of our membership.

Marketa, let me ask you a follow-up question, and I want to pick up, I think, on something that we heard from Geoff earlier, who gave us and talked through little bit about the challenge of trying to administer some of these treatments when there wasn't a CPT code in place to clearly facilitate that. Is that a challenge from a payer perspective as well? Or was that a challenge -- has that been a challenge from a payer perspective as well?

Oh, certainly, certainly, almost to the point where we're not really able to reimburse when there's no CPT code. CPT codes are certainly sort of the gold standard by which we take through our, what we call internally our source of truth on how we -- our payment strategy across all of our lines of business. And so without ICD-9, 10 or 11 codes as well as CPT codes, we're just not able to do that. It really is a critical enabler for us to be able to move forward with our plan offerings.

Great. Thank you very much for that. We've got a number of people on the line who I think probably are going to want to ask some questions as well. So I think we'll wrap up the moderated discussion here. But before I turn it back over to Steve, Steve Schultz, for his bringing in the analyst questions and Kabir for some closing thoughts. I just want to ask Geoff, Marketa, if you have any closing thoughts as we wrap up this portion of our program today. Geoff, why don't we start with you. I think Geoff maybe is having trouble hearing me.

Can you guys hear me?

Yes, yes. We got you there.

All right. Good. Sorry, but that wouldn't let me unmute. So yes, what I would say is this, I mean, this is exciting, right? And we're seeing the field of psychiatry change, our behavioral health change pretty substantially. The era of psychotherapy and medications being the base of all treatment is beginning to evolve into something much more sophisticated. And I equate it to the difference between office-based cardiology and interventional cardiology. The two need to work hand in hand together to be able to better help their patients. And companies like Greenbrook are trying to fill that need. And with this evolution, what it allows us to do is begin to build in the systems and processes now in our company at Greenbrook. Literally, the facilities, the logistics, the staffing, the modeling, putting the financial models together to figure out how to get this to the patients who need it. If we look at the need for treatment-resistant depression, we are talking millions of patients, 1/3 of people who get treated with medications and/or therapy will not have an adequate recovery. And you're talking prevalence rates of depression in the U.S. being between -- depending on which stats you look at, 7% up to almost 20% during the pandemic. So you were talking a huge number of people with needs and we now are in a position where we don't have to wait for approval of launch to begin to build the systems. We can do it today so that when the time does come, we can help those patients who are seeking out this therapy.

Geoff, thanks very much. Marketa, any closing thoughts from you before I hand to Kabir?

Thanks for that opportunity. I'd echo the previous panelist's comment. This is a game changer for the field of psychiatry. And it will allow us to think differently about how we think of total cost of care for physical health and behavioral health interventions. I, for one, am excited about this opening up. I'm excited about access for all communities, whether they be low-income communities in Medicaid or Medicare, commercial populations as well. And so I think that this modality is going to be certainly a game changer that unlocks treatment for folks who were having limitations being treated with medications and therapy.

Marketa, thank you, Geoff, Marketa, thanks to both of you for joining us in our conversation today. And I'll ask that you stay with us for the Q&A portion of today's program. Let me ask Kabir for some closing comments before we take it back to Steve Schultz. Kabir, I don't think we've got your audio. I can't hear Kabir. Kabir, you want to give it 1 more shot?

Yes. Can you hear me now?

We got you.

Yes, about it. No first, thank you very much to Geoff and Marketa for joining us. And I think just a couple of salient points to pick up. I think you use words like revolutionary and game changing, and that's certainly how we see the potential for psychodelic therapies if they are approved. I think the other thing was, thank you again to both of you for reminding us that the urgent need, the unmet need. Certainly, the prevalence of treatment-resistant depression, the fact that so many people with depression will unfortunately progress to not being served well by current treatments and also the extensive comorbidities that this is not just a disease that you can see in isolation. And so again, as I said at the start, we truly are excited. I'm proud of the fact that we, together with MAPS PBC led this work in a very early way in order to allow folks like Geoff and indeed Marketa to do the work in their different institutions that prepares for the potential approval and launch of these. So again, very excited about it. And I think another key example of the building blocks we and COMPASS are putting in place for success in the long run.

I'm told that Steve Schultz is with us even though I can't see him. So Steve, if you're there...

Can you hear me Chris?

Yes, we got you, Steve. Great. Thanks. Glad to hear you. Let's turn it over to you for the Q&A.

All right. Good. I apologize for not being on video, but I'm sure all of you have seen enough of me. So let me begin with questions. I will start with Patrick Trucchio of H.C. Wainwright & Co. Patrick, go ahead.

Congrats on getting the Category III CPT code through the system well in advance of the potential launch of COMP360. If we look ahead post approval, COMPASS would still need a category I CPT code, which could take 1 to 3 years to receive. So our understanding is that having this category III CPT code may accelerate the timing. So for the panel, then a few questions. First, is this understanding of this transition from the Category III to Category I CPT codes correct? Secondly, can you discuss how you would go from having a Category III CPT code to a Category I CPT code? What is the difference between these codes? And ultimately, how do you accelerate it from maybe what was seen with Spravato or TMS or some of these other examples, how do you accelerate that timing? And what's the -- ultimately, how much does having this category III CPT code now accelerate this launch for COMP360, assuming it's approved in a few years?

Is that what I should take?

Yes.

That's a great question, Patrick. So I think this partly relates back to something that Geoff was touching on earlier, and this was around the urgent needs that exist right now for these patients, the work that needs to be done in order to create this access. And the fact that a lot of that work can start now even ahead of approval. This is a perfect example of that. We -- there is no access without FDA approval. Let's just start there, right? There is no shortcut to that. We are committed to the rigor of conducting the studies that will get us to that approval. At the same time, I think we need to have some confidence in the likelihood of that approval. And with that, to begin all the work that we can do now rather than waiting until approval and therefore, having delays potentially to patient access. So this is a perfect example of that. by applying for and receiving the Category III codes now, we can start that clock earlier on that required time. And Patrick, as you mentioned, that often can be 1 to 3 years post the issuance of a Category III code or post the approval of a product. One of the criteria for moving from Category III to Category I is sufficient reporting of that code and usage of that code in the community so that health care providers can be surveyed as to the work being done to deliver these services and the value can be applied to the code when it's issued. In the case of this code that's just been approved, it's 0820T. It is not specific to our product or to any particular indication. It can be used across a range of product services and indications. And so early applications of this code may be to ketamine-assisted therapy? Or should MAPS have their product approved for PTSD, which may come before us, this code will already start to be used. And because there's likely a few years prior to our potential approval and launch, there is likely to be sufficient usage of this code such that we can more quickly move towards that category I code and potentially even prior to our launch.

Got it. And then I think in the past, you've talked about the need for education initiatives to make sure service providers are aware of the codes existence and its eventual use with psychedelic therapeutics. So my question for the panel is what are the best ways to make service providers aware of the category III CPT codes existence?

If Geoff or Marketa, you want to weigh in on that, please. That would be great to get your perspective.

Yes, can you guys still hear me okay?

Yes, we can.

Okay. Good. Sorry, the mute button on the software here is not indicating on or off, so I'm never sure what's status I am in. So, I actually don't think that when that launches, that's going to be as big of an issue in the psychedelic community for a couple of reasons, right? Honestly, when there's a new modality that comes out like this, you're going to have service providers you're basically like how -- what are the methods by which we're supposed to communicate with payers on this and it's like here's the code for this individual modality. I'm not going to speak to Compass's launch, but I'm sure it's not going to come without its own fair, robust outreach to improve awareness within the medical community and with patients. And when companies do that, they typically will fold in this information when it's relevant to that particular modality. So yes, I honestly think the uptake on that of all the things we're going to have to worry about that, at least on the service provider side, that's probably going to be much less of a hurdle than other things.