Field Trip Health Ltd.

Greetings and welcome to Field Trip First Quarter 2022 Earnings Results Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Elizabeth Barker, Senior Vice President of Investor Relations at KCSA. Elizabeth.

Thank you. Welcome, everyone, to Fieldtrip's first fiscal quarter of 2022 financial results conference call. Before I begin the call, I'm 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 our filing and our disclosure materials. Any forward-looking statements should be considered in light of these factors. Please also note, as safe harbor, any outlook we present is as of today, and management does not undertake any obligations to revise any forward-looking statements in the future. On the phone with us today, we have Ronan Levy, co-founder and executive chairman, Joseph Del Moral, co-founder and CEO, and Donna Wong, CFO. I'll now turn the call over to Ronan to provide some insight into the company's strategic direction.

Thanks Elizabeth and good morning everyone. Welcome to our first quarter of fiscal 2022 earnings call. Well, it hasn't been long since our year end call. We have continued to make progress against our strategy, executing with speed and agility as we make the most of this huge opportunity that we have as trailblazers in the psychedelics market to help transform the current approach to mental health and build Fieldtrip into a revolutionary psychedelic therapy development company. I'm going to spend a few minutes now giving an overview of our strategy and explaining where we fit in the psychedelics market. As the psychedelics industry is still emerging, there are limited but growing number of players at this stage. We have implemented a differentiated strategy that we believe provides us with a de-risked path to drug development and commercialization, leveraging the synergies between our different businesses to collect data that can be used to ensure our approach is targeted, effective, and with an optimal go-to-market strategy. As many of you know, our main focus is on the development of a synthetic psychedelic drug FT-104 for use in mental health care with an initial focus on depressive disorders. Alongside this, we also offer psychedelic-assisted therapy that combines the science of psychedelic medicine with a personalized psychotherapy protocol to empower patients to enact lasting, meaningful change in their lives. At Fieldtrip Discovery, we are developing the next generation of psychedelic molecules. Our current candidate, FT-104, is designed to reduce the duration of psychedelic experience for patients and providers of psychedelic therapies. The combined efforts of Fieldtrip Discovery, our drug development arm, and our Fieldtrip Health network of sites for psychedelic medicine are operationally synergistic. The Fieldtrip Health Centers primarily exist to implement the research and commercialization goals of Fieldtrip Discovery. Through the psychedelic-assisted therapy offered at these sites, In addition to delivering unparalleled care to our patients, we can collect robust data that will allow us to identify areas of opportunity and unmet need. At our sites in North America, we use ketamine-assisted therapy, and in the Netherlands, we use natural psilocybin-assisted therapy. Both are proxies for future regulated and reimbursed psychedelics, in particular those developed at Field Trip Discovery. In addition, through our field trip health division, we are also building the physical infrastructure and technology platforms to deliver psychedelic therapy at scale, which also provides us an early opportunity to interface with providers, develop referral networks, interface with payers, all of which de-risk the path to drug approval and commercial success for this new therapy. While the psychedelics industry is in the early stages of its growth, psychedelic therapies are showing promise as highly effective and fast-acting treatment options. Our integrated business model is designed to optimize the path to regulatory and commercial success for our drug development candidates. We are proud of the rapid progress that we have made to date, establishing such a strong foundation from which to execute against this strategy. I'll now turn the call over to Joseph Belmoral, our CEO, to talk through our operational achievements in more detail and shed some more light on our plans for the remainder of the year.

Thank you, Ronan. As Ronan just mentioned, we're working very hard here at Fieldtrips to make the most of our early mover advantage and are executing on all fronts. Development of the chemistry, manufacturing, and controls of our lead candidate FT-104 continues to progress. We had previously conducted several preclinical activities, including in vitro and in vivo studies, which yielded very encouraging results and suggests that FT-104 meets all the criteria indicating that it is a strong 5-HT2A receptor agonist, which can be delivered with high bioavailability and will produce a reliably short duration of psychedelic experience in the range of two to three hours. This is approximately half the duration of psilocybin and would make it a practical alternative with greater utility. During the quarter, we continued with our preclinical activities, including completing scale-up batches and engineering batches and initiating stability studies. In addition, analytical controls were developed to properly characterize the drug substance and to help define the drug specifications. We are pleased to report that GMP production of the drug substance has now been achieved, and we are working toward finalizing the drug product formulation for use in Phase 1. Our preclinical activities will continue through 2021 with the goal of determining the pharmacokinetics, metabolism, and routes of elimination in animal species, as well as safety pharmacology. These studies will enable us to enter phase one trials and are expected to be completed by the end of calendar 2021. Our science team, led by Dr. Nathan Bryson, who has more than 30 years of experience in pharmaceutical development, is evaluating a proposal for the Phase 1 study that will assess pharmacokinetics, safety, and tolerability of single escalating doses of FT-104 in healthy volunteers. We anticipate that FT-104 will enter Phase 1 in calendar Q1 2022. Our U.S. patents for FT-104's composition of matter, formulation, and use in treating a variety of central nervous system disorders were filed in June 2021 with a priority date of June 30, 2020. These patents relate to FT-104's structure, formulation, and use in treating a variety of central nervous system disorders to help secure a long-term competitive advantage. The U.S. patent was filed as a Track 1, which ensures resolution within one year. We also intend to add at least one new molecule to the development pipeline before calendar year end. While the FC-104 drug development strategy is our focus, we are also rolling out our globally recognized brand of psychedelic assisted therapy clinics. In the first fiscal quarter, we opened our fifth location in the United States in Houston, Texas. This is the second field trip health site to open in 2021 and our sixth in North America. including our existing sites in New York, Toronto, Los Angeles, Chicago, and Atlanta. Subsequent to quarter end, we completed construction of our clinic in Amsterdam, the Netherlands, and began accepting patients in July 2021. Unlike our North American sites, which use ketamine, our Amsterdam site will be the first field trip health site focused on the therapeutic use of legal psilocybin truffles. During the current fiscal quarter, we entered into leases in the following locations. San Carlos, Seattle, Austin, Stanford, Fredericton, and Vancouver. Subsequent to quarter end, we entered into lease agreements for Miami, Scottsdale, and Dallas, and signed the lease for additional space at our Toronto headquarters and clinic location. Our field trip health sites deliver best-in-class psychedelic therapies with legal psychedelic molecules, providing us with the infrastructure for broad patient access. Crucially, they are also an invaluable source of data to execute on our research goals of field trip discovery. We expect to have 20 field trip health sites operating under construction by the end of December 2021. I will now turn the call over to Donna Wong, our CFO, to discuss our financial results and our capital markets activity.

Thank you, Joseph, and good morning, everybody. For our first fiscal quarter 2022 into June 30th, 2021, our patient services revenues increased 65% from $500,000 in our fourth fiscal quarter to $900,000. Revenue was generated from our Toronto, New York, Santa Monica, Chicago, Atlanta, and Houston sites. Of note, the Houston site opened halfway through the quarter. Our prior year comparative period only include revenues from the Toronto clinic. As a reminder, after each site opens, there is a ramp-up period in the number of patients seen per month. The ramp-up at each site is forecasted to take on average 15 to 18 months to break even. This controlled growth allows us to scale all aspects of the operation, including hiring and training new therapists while still providing a very high-level experience to each client. We expect to continue scaling our revenue as the number of patients treated at our locations increase and as our Houston site continues ramping up. As Joseph mentioned, we are on a track to have 20 clinics open or under construction by calendar year end 2021. However, given the increased uncertainty surrounding COVID-19 as a result of its variance, we will continue to evaluate the timing of our future clinic rollouts as appropriate. Our general and administration expenses at $7.7 million are our major expenditures, and during the quarter, included $1 million in non-recurring costs, primarily related to the company's TSX and NASDAQ uplistings, and approximately $1 million in recurring public company costs. Our other operating costs include R&D at $1.4 million, patient services expenses of $1.3 million, and sales and marketing expenses of $1 million. Net loss for our first fiscal quarter of 2022 was $12.5 million, or 22 cents per share. primarily due to total operating costs of $12.3 million, of which $1.6 million related to non-cash share-based compensation and depreciation and amortization, excluding the DNA associated with leaseholds. We also have recognized and unrealized foreign exchange loss of $1.1 million. Our total operating costs are significantly higher than the same period in the prior year, and we're driven primarily by the scaling of our globally recognized brand of psychedelic-assisted therapy sites. This compares with the net loss of $3 million or 21 cents per share in the same period of the prior year, which was primarily due to general and administration expenses of $1.4 million, research and development expenses of $0.7 million, and unrealized foreign exchange loss of $0.4 million. At quarter end, our unrestricted cash and cash equivalents, funds held in trust, and short-term investments were $99.8 million compared to $111.8 million as of March 31, 2021. Our solid cash position will help to continue facilitating the execution of our strategic plan, which is centered around leveraging our deeply integrated platform in combined drug and development, psychedelic therapies, and technology-enabled virtual care solutions to further our mission to bring psychedelic-based treatments to a broader and diverse audience. During the quarter, through options and warrants, exercise, we generated gross proceeds of $400,000. We keep our shareholders' best interests at the heart of every decision we make and are pleased to have achieved several milestones in this regard in recent months, including uplisting to the TSX to provide better liquidity for our Canadian shareholders and securing DTC eligibility in the U.S., followed by our uplisting to the NASDAQ, which makes our shares much more accessible to U.S. and international investors, including institutional investors. These are significant achievements for Fieldtrip and reflect not just the traction that we are making with our business plan, but also the broader industry acceptance of the potential for psychedelics to play a meaningful role in mental health treatment. This is a very exciting time for the whole team at Fieldtrip, and we're grateful for our shareholder support at this time. With that, I'll now ask the operator to open the lines for the Q&A session.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask your question, please press star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Our first question is from Andrew Parthenio with Spiegel. Please proceed. Hi, good morning. Thank you for taking my questions. Morning, Andrew.

You know, maybe just talking about your existing molecule, FT104. Obviously, you guys are making good progress here. And, you know, the expectation to enter phase one and calendar of Q1 2022 is definitely encouraging. Could you talk about, you know, a little bit more, you know, the strategy behind, you know, your pre-IND meeting with the FDA or, you know, regulators in Canada? You know, what are you thinking about getting the timing ready for that? And what kind of materials do you think that you want to have in hand for that meeting?

Thanks for the question, Andrew. So the phase one trial will be conducted at our CRO site in the Netherlands. And so in the Netherlands, the approval is more based on an ethics-based approval. So we won't have to have an IND meeting with the FDA prior to our phase one trial. So our plan is to complete our phase one trial in the Netherlands and then go back to the FDA for our pre-IND meeting with that phase one data. in hand and prepare for our phase two, which we intend to run in Canada and the US.

Sounds like that might be a path that's kind of de-risked and has a little bit increasing chances of success. Would that be a fair assessment?

The main reasons we want to do that is it's faster to get into the phase one trial through that path is one reason. Another reason is that actually in phase one trials like this, you actually dose healthy volunteers who have experience with psychoactive drugs. And in the Netherlands, there's a high population of healthy volunteers who meet that criteria. So I think it'll help with patient with study participants recruiting. And then we'll have that solid phase 1 human data, and then we can go and have our pre-IND meeting with the FDA with solid data in hand and help design our phase 2 trials in the best way possible to reduce the risk as much as possible on our phase 2.

Thanks for that, Kalar. And just, uh, just to clarify for the phase two, are you guys, are you thinking of, um, you know, having sites in, in Canada and the U S or, um, could there be additional geographies or, or, you know, obviously it's a little early to make any hard decisions on that, but just wondering, um, if there's a possibility to share on your thinking.

Sure. It is a bit early to start talking about the Phase 2 design yet, but it is our plan to have our sites be in the U.S. and possibly Canada as well for our Phase 2. And we're investigating whether we can use some of our clinics as trial sites. So it's all details that we'll have more to speak on as we get closer.

Perfect. You know, it's a good segue here talking about the Netherlands and Amsterdam. You recently opened a clinic there for psilocybin therapy, as you've discussed on the call today. Just wondering if you can share any kind of performance or how the community is accepting the clinic. You know, how are you approaching pricing and sessions or even group sessions potentially, you know, given the extended time of a psilocybin trip? You know, any kind of color on there that you could share? Obviously, again, it's a little bit early, but, you know, any kind of color you could share would be helpful. Sure. Sure.

Yeah, happy to do that. Our clinic in Amsterdam is an absolutely wonderful 7,000 square foot facility. It overlooks the river. It's a beautiful place. And we have incredible staff, just really talented, passionate staff who are working there. And we've been actively exposed in the media. We've been covered by many of the major news outlets in the Netherlands. There's a lot of awareness building in the Netherlands about our facility there. There's been a lot of interest. In terms of the sessions, we have had our first patients come through. We have patients that are coming in regularly now, so the operations have started there. It's too early to say financial results or anything along those lines, but we've heard that patients are having really positive experiences. So really very positive early feedback from the patients at that clinic. And as a reminder, we are treating the therapy using the psilocybin truffles there. Medically, we have a psychiatrist who screens the patients, and we have therapist support throughout the whole day for the patients. We have preparatory work and we have integration therapy afterwards. So it's a true psychedelic assisted psychotherapy center. And it's too early to talk about results in any formal way, but just anecdotes that we've heard from the first group of patients that's gone through has been very positive.

Thanks for that. And maybe the last one before I get back in the queue. You know, you discussed adding a new molecule to your pipeline before year-end. Obviously, right now you have a pretty robust cash position. You know, you've put together a little bit of clarity on uses of cash in the MDNA. Just wondering, you know, how do you see this new molecule evolving with your cash flow? with your existing cash now. Are you thinking about potentially M&A, any kind of updates since the last call, or anything around that could be helpful?

Sure. We hope to have obviously a more detailed update on our pipeline before the end of the year. What I can say now is that we are actively investigating internal candidates that we've developed internally, as well as external opportunities for licensing. Beyond that, there's really not much I can add at this point, unfortunately.

No worries. Thanks for that, and I'll get back in the queue.

Thanks, Andrew.

Our next question is from Jason McCarthy with Maxim Group. Please proceed.

Hey, guys. This is Michael Kunowich on the line for Jason. Thanks for taking the question, and congrats on the NASDAQ listing growth this quarter.

Thanks, Michael. Appreciate it.

So, you know, I know it's still quite early, but I'd like to see if you could share with us anything that you've learned so far operating the Amsterdam clinics with psilocybin? Perhaps if you determine anything on how the use of a classical hallucinogen differs from a treatment and assisted therapy perspective versus ketamine.

Well, these are the really interesting questions that we're looking to answer. You're hitting on the strategic relevance of our clinic network to help develop the best protocols, the best therapies to combine with psychedelic drugs to create the best possible outcomes. And so what we can say so far, although it's really early, is that there are differences, pretty meaningful differences, between administering ketamine and psilocybin in terms of the patient experience and the way that it has to be administered. In the Netherlands, we have patients who are staying an entire day in the clinic, so our clinic is designed for that. The dosing rooms are large, well-lit with natural light, comfortable spaces where the patients will have hopefully positive experiences, or at least I think we've optimized around the set and setting in psychedelic parlance. But what I'll add though is an interesting insight that's come out recently from our ketamine clinics and something that we're evaluating further as we go is we've started collecting patient outcome data that extends now three months and beyond their last ketamine administration. And what we're seeing is really encouraging results from patient outcomes who go through our ketamine-assisted psychotherapy programs in terms of the duration of the effect lasting significantly longer than you'd expect from ketamine alone. So there seems to be a really positive benefit from adding the psychotherapy to the ketamine in terms of the duration of the effect we're seeing in patients. We're excited about what's happening in our ketamine clinics as well in terms of being able to extend the efficacy of ketamine, which is a known antidepressant, into the period sort of from one month to three months now for many of our patients. So we're excited about some of the data coming out of both the ketamine clinics and the clinic in the Netherlands using psilocybin.

All right. Thank you. And then... Keeping on kind of the strategy side, I'd like to see if you'd give us some insight on what goes into the decision-making process when you're deciding where to open a new clinic. Do you look at the concentration of existing ketamine infusion centers and therapy centers, or are there some other additional criteria that you look at, if you can share this?

Sure. We have a detailed process. process that we go through involves looking at a whole lot of data around demographics and there's a selection process to choose the city and there's a selection process within the city. And so there's a number of decisions that go into that. One of them is we do look at how many ketamine clinics are there, but it's not high on our list of decision-making factors. We don't really consider ourselves as being directly competing with just straight IV ketamine infusion centers. The protocol that we follow with ketamine-assisted psychotherapy is quite different. And I think more patients see it as quite different. But, you know, we're obviously right now, for the most part, the treatments are private pay. So you need, you know, it is something that, you know, is an out-of-pocket expense for many patients, at least portions of the total cost are. And so we look for large enough cities that can support that clinic and the cost of the therapy and a number of other factors as well.

All right. Thank you. And then for the last one, I just want to switch gears a bit to the upcoming phase one and how you actually go about the process of treating subjects. I know there are healthy patients, but Do you go through and are you going to try to get any feedback on the actual clinical protocols or treatment resume or treatment room design? Or is this purely just you're going to look at the drug and its safety and PK effects?

There are some questions in there that we're still working through. What I can say is that the main goals are safety and PK, but we do intend to collect subjective experience feedback from the study participants. So you've correctly outlined one of the risks there is that if you're giving people a psychedelic experience in a less than ideal setting, perhaps in a sort of phase one clinical site, and you're doing blood draws during the psychedelic experience, you know, it maybe is challenging to get really great data back on subjective experience. So those are challenges we're working through, but I don't think they will affect sort of the primary outcomes that we're aiming for, which is the safety and tolerability in PK.

All right. Well, thank you very much for taking my questions. Thank you. Our next question is from Elmer Piros with Roth Capital Partners.

Please proceed.

Yes, good morning everyone. Can you hear me? Good morning, Elmer. Yeah, we can hear you fine. Yes, so what is your best performing site right now and how many patients have entered that site during the last quarter, please?

Elmer, we don't actually disclose specific clinic numbers But I'll say in general, our best performing clinics are the ones that have been open the longest as they've had more time to ramp up. We expect a ramp up period to occur at every clinic. So I think it's safe to assume that Toronto and New York being our two oldest clinics are our busiest sites.

Okay, thank you.

What would it take to qualify these sites for clinical trial sites, including for FTE104?

That's a question that we're working through in the coming quarters as we get ready for our Phase II results. We hope to have some more to say on that in the coming months.

Okay. Thank you. There is a company in Europe with access to a treatment protocol using ketamine for alcohol use disorder. Would you be interested in taking a license from them or would you need one if you choose to treat this patient populations with ketamine specifically?

That's a good question. I actually don't.

I'm not sure I know which company you're referring to. What I can say is that For the depression and PTSD protocols that we use with our current patients using ketamine in our current clinics, we developed those protocols internally. So we have the capability to develop protocols internally, and we're seeing really good results with them so far. So probably our first plan would be to develop protocols internally using the expertise we have developed and have internally. But we're always open to looking at opportunities.

Yes, the company is Avakin from the UK, by the way. And turning on to the Amsterdam site, just curious, can you treat patients from outside the Netherlands there?

Yes, in fact, I would say a large proportion of the interest we've received for that clinic has been from outside of the Netherlands. So definitely, yes.

Just a sidebar as a comment, I couldn't turn on the English version of the website, and for some reason, at least for me, Google Translate did not work to translate from Dutch to English. Okay, thank you. We'll have a look at that. And I also wanted to comment on something that you described as an incredible staff, and you wanted to provide high level of patient experience. I know someone who just completed treatment at your New York Center, and this person described your staff as compassionate, kind, and the most responsive ever. So congratulations on selecting the staff.

I love hearing that, and thank you so much. It's really one of our sort of hidden superpowers at Fieldtrip is this passionate, dedicated staff that choose to come work with us. And it's been amazing to see the quality of the people that we're able to attract and the incredible work that they do when they're here.

But I love to hear that, so thank you. Yeah, thank you.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation will indicate your line is in the queue. Our next question is from Bruce Jackson with Benchmark Company. Please proceed. Hey, guys.

So in terms of scaling up the new centers, originally it was in the 12-month range, and then it moved into the 15-month range with COVID-19. Where do things stand right now, and has there been any improvement since the economy started to reopen a little bit?

Our estimate is that clinics will hit break-even in the 15 to 18-month range. That's what we're seeing right now based on the ramp-ups at the clinics. We still are concerned. About the effects of COVID-19 in particular, there's, you know, you can imagine there's effects on some of our new programs, like our group therapy programs become more challenging as COVID continues to increase with the new variants. So it is something that we're watching closely, and it's, you know, we We are seeing clinics continue to ramp, but there also have been signs that patients are concerned about coming, some patients have expressed concern about coming into physical clinics. So it's something we're keeping a close eye on for sure.

Okay. Then you've been working on a premium version of the Trip app. Is the launch date on that still going to be sometime later this year?

After that, I'll hand it over to Ronan Levy to answer.

Hey, Bruce.

Yeah, that is correct. We are currently scoping out and building in some new what we consider to be high-value features into the Trip app, and so we are targeting the launch of a premium version in Q4 of 2021. I always get sometimes look back and forth between our fiscal and our calendar, but speaking calendar Q4 2021, we should be launching the premium version.

Okay, great. And then last question on the FT-104 program, when do you think the pre-IMD work might be completed?

We should have everything completed and reports back and everything done by the end of December of this year.

Okay, great.

Well, thanks for taking my questions and congrats on the quarter. Thank you, Bruce.

Our next question is from Sumant Kulkarni with Canaccord. Please proceed.

Good morning. Thanks for taking my question. This is a bit of a strategy type question. We have an important event in the psychedelic therapeutic space coming later this year in the form of Compass Pathways Phase 2B data for Comp360 or the psilocybin in treatment-resistant depression. What sort of impact, if any, do you think that event may have an influencing demand at your clinics given the read-throughs those clinical data may have in terms of more eyes on the space?

Thank you, Sumant. Good question. It is a big catalyst, I think, seen as a big catalyst for the space because it'll be the largest study with psilocybin ever completed. So we're excited about it. We obviously feel positive about the likelihood of good results there. And I think you're right. I think what it does is it brings more eyes to the space, increases awareness of the potential for psychedelic therapies and their ability to have long-term, long-lasting impacts for some mental health conditions. So I think, you know, just speaking for the clinic side of the business, I think it's a positive, it could be a positive step for us. On the drug development side, obviously, you know, a positive trial helps to further show the potential for 5-HT2A drugs like FT-104. And so, you know, I think that's, you know, all positive potential there.

Thank you. Thank you too, Mont.

Ladies and gentlemen, there are no more questions at this time. I'd like to turn the call back to Ronan Levy for closing remarks.

Thank you, Operator, and thanks to all the analysts for your questions today. We expect interest in and demand for psychedelic therapies to continue to rapidly expand over the coming years and believe the emerging psychedelics industry has the potential to be a $100 billion market. Where big pharma has fallen short in terms of driving breakthroughs and innovation in mental health, innovative companies like Fieldtrip are filling in the gap. With our psychedelic-assisted therapy, we're advancing treatment options with healing psychedelic experiences, while at the same time investing heavily in our own R&D to advance new and exciting molecules to treat mental health issues. We will continue making investments to be at the forefront of this coming opportunity and look forward to providing more updates on our progress on subsequent calls. With that, I'll ask the operator to close the lines.

This will conclude today's conference. You may disconnect your lines at this time. Thank you very much for your participation, and have a great day.