Good morning, and thank you for attending today's Cybin's acquisition of Small Pharma Incorporated. My name is Jason, I'll be the moderator for the call today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I'll now like to pass the conference over to our host, Doug Drysdale, the Chief Executive Officer of Cybin.
Good morning, everyone. Thank you for joining us today and taking the time. I know some of you may even be calling in from vacation, so, very much appreciated as we share some very exciting news today. This morning, we issued a press release announcing that Cybin has signed a definitive agreement to acquire Small Pharma Inc., a U.K.-based biotechnology company focused on developing short-duration tryptamine-based therapeutics. With this transaction, we're clearly creating an international clinical-stage leader in novel psychedelic therapeutics. On today's call, I'm very pleased to be joined by George Tziras, CEO of Small Pharma.
Today, George and I will walk you through the compelling strategic and financial rationale for the transaction and how we believe the combination of the two companies serves to accelerate our mutual goal of addressing the enormous unmet medical needs of those suffering from mental health conditions and de-risk our clinical drug candidates. At the end of our prepared remarks, we will open the floor to questions. A webcast replay of today's program will be available later on Cybin's website in the Investors section under Events and Presentations. Before we proceed, please turn your attention to the cautionary statements, and for a full disclosure of risks associated with our business, please visit our website.
Let me begin by saying that we believe this combination is highly synergistic and puts us in an even stronger position to bring novel, optimized, psychedelic-based treatments to patients who need them the most. With two proprietary advanced clinical programs in development for depression and anxiety, there's an enormous opportunity to combine our resources and bolster our capabilities. This transaction establishes our leadership in DMT development, with the largest data set and the strongest IP portfolio in the sector. Both companies have complementary deuterated DMT programs and are pursuing the development of potentially best-in-class tryptamine-based therapeutics. We are each working on different deuterated analogs and different formulations, so we see this as an enormous opportunity as we combine resources to expand our key programs. Our joint portfolio creates the industry's largest and most advanced and well-protected deuterated DMT program.
The combined operating teams of Cybin and Small Pharma create a sector-leading organization with deep expertise in drug development, including in deuterated psychedelic tryptamine-based therapeutics for mental health disorders. We are creating an international clinical stage leader in this space with the potential to transform the treatment paradigm for mental health conditions. Let me briefly explain what exactly we mean by deuteration and why it's so important to our programs. Deuteration is a naturally occurring form of isotope substitution in which selective hydrogen atoms are replaced by their heavier cousin, deuterium. This alters how drug molecules bond and how they are metabolized, which results in more stable molecules and which could then reduce variability in dosing. In our preclinical work, we observed greater bioavailability and improved brain to plasma concentration ratios.
Deuterated molecules are considered new chemical entities, and both Small Pharma and Cybin have created an extensive patent portfolio related to these deuterated compounds. I'll now... George, to take us through the impact of our joint portfolio.
Thanks, Doug. This consolidation of Small Pharma and Cybin advances us on the pathway to bringing safe, effective, and patient-friendly treatment options for those who can benefit. As Doug has mentioned, together, we have the largest data set of systematically studied DMT and deuterated DMT. This includes, first, an extensive Phase I data set for IV formulations of DMT and deuterated DMT from CYB004, SPL026, and SPL028. Second, Phase II safety and efficacy data from IV DMT in patients with major depressive disorder from SPL026. Third, studies exploring more convenient and patient-friendly dosing methods from the Phase I intramuscular SPL026 and SPL028 programs and from Cybin's subcutaneous work with CYB004. And finally, Phase Ib safety and efficacy of SPL026, administered in conjunction with SSRIs in patients with major depressive disorder, with data anticipated in late 2023.
Now let's look more closely at the programs and upcoming milestones. Small Pharma has two programs. The first is SPL026, our first-generation DMT asset. In a Phase IIa study, IV SPL026 demonstrated a rapid and durable antidepressant effect, with data out to six months, as well as a favorable safety and tolerability profile. This data serves as a strong proof of concept for our combined DMT programs in depression, as pharmacologically, DMT and deuterated DMT are very similar. The second program is SPL028, our proprietary second generation deuterated DMT asset, which is currently dosing in a Phase I trial. Going forward, we plan to use our first-generation DMT program to expedite the advancement of the optimized multilayer patent-protected second generation program.
Once the transaction closes, we intend to combine Small Pharma and Cybin's DMT and deuterated DMT programs into a single program, with access to the broad data set I just mentioned on these short-duration psychedelic molecules. From an efficiency perspective, the highly complementary nature of the company's combined development portfolios provides numerous opportunities to capitalize on our shared knowledge and expertise, as well as enable operational and cost synergies. Data readouts from both the company's Phase I deuterated programs, CYB004 and SPL028, are anticipated by fourth quarter 2023. This will enable a robust evaluation of formulation and administration routes, and an informed, data-driven approach to launching a Phase II efficacy study of deuterated DMT in the U.S. early in 2024. I'll now hand it back over to Doug to further discuss synergies.
Great. Thank you, George. Yeah, a couple of additional points I'll mention on the synergies and impact of the combined entity. Small Pharma's U.K. operations provide synergy with our CYB003 program as well, as we scale to Phase III development of CYB003, beginning in early 2024. We expect to report Phase II safety and efficacy data from our CYB003 deuterated psilocybin analog in patients with MDD in the coming months. Plans are already underway to expand the program to Phase III, including a partnership with Worldwide Clinical Trials, a global CRO, a streamlined EMBARK CT facilitator training program, and preparations for GMP manufacturing of CYB003 capsules for pivotal study, trial supplies. Cybin was recently granted a composition of matter patent, covering deuterated psilocybin analog in its CYB003 program, and anticipates the potential for breakthrough therapy designation as early as late 2023.
Another noteworthy part of the acquisition revolves around intellectual property. The combination of Cybin and Small Pharma creates the largest IP portfolio in the psychedelic drug development sector, with a combined portfolio of 158 pending patent applications, including two allowed applications and 28 granted patents, protecting the company's clinical and preclinical portfolios. This extensive IP portfolio creates an unmatched operating space for us to develop next-generation deuterated compounds for a number of mental health disorders. In this field, as you all know, the value of a robust patent portfolio cannot be overstated. In terms of the deal itself, this is an all-stock transaction. Under the terms of the agreement, Cybin will acquire all of the issued and outstanding common shares of Small Pharma at a fixed exchange ratio.
Small Pharma shareholders will receive 0.2409 shares of Cybin for each share of Small Pharma stock. The exchange ratio implies a 43.6% premium to Small Pharma's 30-day volume-weighted average closing stock price on August 25th, 2023. Shareholders representing approximately 29% of Small Pharma Inc's issued and outstanding shares, and approximately 17% of Cybin's issued and outstanding shares, have entered into support agreements to vote in favor of the transaction. In terms of leadership, I will continue to lead as CEO of the combined company, and we plan to integrate the Cybin and Small Pharma senior leadership and the operating teams, resulting in a highly experienced and skilled group of scientists and innovators who are well positioned to deliver on the development and clinical execution of the combined pipeline.
The company will remain incorporated in Toronto, with operations in Canada, the U.S., the U.K., the Netherlands, and Ireland. The stock will continue to trade on the NYSE American and NEO exchanges under the ticker CYBN. To sum it all up, with this acquisition, we're combining highly valuable clinical assets with strong efficacy and safety data, and creating an international leader in psychedelic-based therapeutics for mental health disorders. The synergy of our, of our development programs, our robust combined intellectual property estate, and the data sets that we have generated, all serve to enhance both our leadership position in the space and our access to world-leading scientific and clinical collaborators. As we look ahead, the remaining months of 2023 still hold the promise of multiple value catalysts from each of our programs, including the Phase II safety and efficacy readout for CYB003 in patients with MDD.
The combined company, upon closing, expects to launch both a deuterated DMT Phase II study and a Phase III MDD CYB003 clinical program in early 2024, providing several future catalysts. I speak for all of us at both companies when I say that the need for improved mental health treatment options is urgent. I'm confident that with the new whole that we are creating, it will be stronger than the sum of our parts. Our combined expertise in developing potentially best-in-class deuterated tryptamine-based therapeutics positions the new Cybin to generate long-term value for all stakeholders. And importantly, we look forward to welcoming our Small Pharma colleagues into the Cybin family. Thank you for your time today. With that, I will open up the line for questions. Okay, I see we have a question from Charles Duncan.
Our first question is from Charles Duncan with Cantor Fitzgerald. Your line is now open.
Hi, Doug, can you folks hear me?
Yep. We're just fine. Very good, Charles.
Oh, okay. Hi, Doug, George, thanks for hosting the call. Congrats on this interesting transaction. I had just a few, just a couple of questions. I guess I'm wondering if you could provide any additional color on the different analogs, your different approaches to deuterating, your, your molecules. And yeah, perhaps you can help us understand how you think those different approaches may impact clinical... yeah, the clinical results that you anticipate later on this year.
Yeah, so I can take that one. Yeah, we have a range of deuterated analogs between the two companies, covering a spectrum of different substitutions of hydrogen with deuterium. And that creates, obviously, a number of different molecules that each of us has looked at, preclinically, and we've brought forward some candidates clinically. As we read out Phase I data, in the fourth quarter, I think then we'll have a couple of really robust data sets, where we can look at each individual analog, the IP around each of them, indications, formulations, you know, IV, IM, subcutaneous. And I think we've got quite a lot of data then to be able to choose exactly which path we go forward with.
Certainly there's a lot of choices to make as we go into Phase II. You know, the most robust data set with the two companies combined.
Okay, that's helpful. And then given that you'll have a robust data set, but you also have the CYB003 program going on in depression, I guess, perhaps, Doug, could you opine on your preference for deuterated DMT going into either an anxiety indication or depression for a Phase II or even a pivotal study?
Yeah. Well, I can say that Cybin's position with deuterated DMT has been to pursue generalized anxiety disorder with depression. The rationale being that, you know, anxiety disorders collectively are the most common form of mental health disorder and the most prevalent when you add them all up. And GAD with depression clearly has significant overlap with MDD in terms of both symptomology and diagnostic criteria. And given that Small Pharma has proven that natural DMT can be very effective in treating MDD, I think that's a really strong proof of concept for the whole DMT franchise. I'll say that when we get the teams together, after closing, we'll determine exactly which indication we choose to follow.
And it'll depend on some of the data and some of the discussions we have as we get close to the closing.
Okay. Last two quick questions. One is, will there be cash contributed from Small Pharma to Cybin's balance sheet? And secondly, can you give us a perspective on how you think deuterated DMT holds up relative to, say, an inhaled version of 5-MeO-DMT and kind of compare and contrast? Thanks.
Well, the first one is easy. Yes, there'll be some cash coming. We can-- Well, I'm sure we'll communicate that as we get closer to closing, what the combined balances are. And obviously there'll be some cost synergies as, you know, we'll be running two public companies, so it's just one. So that'll be good for operating costs going forward. In terms of comparing DMT and 5-MeO-DMT inhaled, I couldn't answer the question. Although the molecules sound very similar, they have quite different experiences, as you know. We have looked at Cybin inhaled deuterated DMT preclinically, and certainly we feel that's a viable option at some point.
But at the moment, as you know, each of us is pursuing intramuscular and subcutaneous, really with the goal of getting away from that IV infusion pump that has been used in the study so far.
Great. Okay, thanks for taking our questions. Congrats on this interesting strategic interaction.
Thank you, Charles. Thanks for joining us.
Our next question is from François Brisebois with Oppenheimer. Your line is now open.
Hi, this is Dan on for Frank. Thanks for taking my questions, and congrats on the acquisition. Just a quick one from me, and you may have slightly touched on this earlier. Could you just describe the synergies here between the two companies, especially with regards to, you know, the DMT program in particular? Do you have any thoughts on administration routes at this time or moving forward for your ongoing trials and future clinical trials?
Yeah, so, I think first of all, in terms of synergies, you know, one synergy for Small Pharma is the diversification of their portfolio to add our CYB003 program. So that's, I think, that's very good for Small Pharma shareholders. For the DMT programs collectively, you know, we now have access between us to the entire dataset of D-DMT and deuterated DMT, rather than each of us having our portion of it. And, you know, our programs are complementary, but they're very adjacent. And so this gives us collectively a much broader scope, where we can choose both the analog, the IP, the indication, and the route of administration.
So we put each collectively between us, looked at IV, subcutaneous, and intramuscular, and then we'll be making a decision on which route we choose for the Phase II study, as we get to closing towards the end of October.
Great. Thanks for taking my questions. Congrats again.
Thanks, Dan.
Our next question is with Andrew Partheniou with Stifel. Your line is now open.
Hi, good morning. Thanks for taking my question. Could you talk a little bit more about the CYB004 program, and maybe outline, you know, what do you think... Was there any white space here that Small Pharma could fill? Just trying to understand, you know, if you could go into a little bit more detail on what you think is the most important gap that Small Pharma could fill in your existing program.
Yeah, look, I'll say that each of these programs has been working adjacently and working in complementary ways, different analogs, different routes of administration, different formulations. That's created a patchwork of IP that each of us has been carefully stepping around each other, if you like. And so pulling the two programs together means that we have the entire dataset and the entire IP landscape. This enables us as a team, as a combined team, to choose the right molecule, the right indication, the right formulation, route of administration, based upon the entire dataset, rather than perhaps stepping around each other carefully so we don't trip over each other over time. So it just makes tremendous sense to leverage all of this work.
Collectively, as we go into Phase II next year, we've got that entire dataset and that entire IP portfolio to leverage.
Thanks for that. And then as well, could you talk about the different, you know, your decision matrix in going through with the transaction of taking over all of Small Pharma, just instead of, perhaps, you know, an asset acquisition of its deuterated DMT program. Could you talk a little bit about what led you to acquire the whole company, given that, you know, arguably the deuterated DMT program is the most valuable asset and is the most complementary to what you're—what Cybin is doing? Just trying to understand those puts and takes.
Sure. I mean, you partially answered that yourself, Andrew, in the sense in that the deuterated DMT program essentially would be most of the assets of Small Pharma. So that kind of leads to an acquisition of the entire company. But beyond that, there's deep expertise within the Small Pharma team. They've got a tremendous bench strength in DMT and deuterated DMT, and also an operating footprint, a clinical footprint in the U.K. And as we look to expand our CYB003 program into Phase III in early 2024, we'll be looking at bringing on European sites into that study. And so having a team on the ground with deep psychedelic experience brings tremendous value. So there's a lot of synergy there.
I think it'd be natural to assume that Cybin would have needed to expand geographically to support studies in Europe. So this is a natural fit.
Thanks for that. And maybe just one last one, please, for me. You know, understanding that there seems to be a few items that needs to be determined, you know, as you go forward to before closing. But just wanted to get your and the cash contribution potential from Small Pharma. Is it fair to assume that there wouldn't need to be any capital raising, any large capital raising activities, between now and early 2024?
Well, you know, Andrew, that these programs are long and they're expensive. You've seen a recent very large raise in the sector, gives you some kind of idea of the cost of late-stage drug development. You know, we have cash on hand, Small Pharma has cash on hand. There'll be some synergies in operations as well. And of course, we have recently reestablished the at the market ATM program for $25 million and an equity line of credit. So we do have access and tools, but you know, we will be generating data very shortly. We expect Phase II efficacy data from CYB003, the first novel psilocybin analog to be delivering Phase II data and getting ready for Phase III.
So as we think about those preparations and those value catalysts, you know, if there's opportunities to sensibly raise capital, you know, of course, we want to take that and set the company up for the long term.
Thanks for that. I'll get back in the queue.
Okay. Thanks, Andrew.
Our next question is from Patrick Trucchio with H.C. Wainwright. Your line is now open.
Hi, everyone. This is Luis. Well, Patrick here. I would ask you, how should we think about Cybin's competitive positioning now, in this short-acting psychedelic area, post-deal? More, more, like, a little bit more color on what you're thinking about the competition here.
I think we have the most competitive advanced clinical program in the sector. You know, the deuteration here really does seem to be making a difference for these molecules. It's not just a tweak for IP purposes. We're seeing increased bioavailability, increased brain penetration. We're seeing effects with both deuterated DMT and CYB003 at lower doses than perhaps we had anticipated, and really robust responses. So we think that the deuteration has the potential to create differentiated and valuable assets. So between CYB003, which is, you know, poised almost for Phase III, and this full DMT, deuterated DMT package ready for Phase II, and that's... Here, we're looking at a very short-acting treatment. It could be less than an hour with very fast onset. I think that's highly competitive and highly compelling.
That's great. How does that fit into the June's FDA's guidance for psychedelic drug development in June? So is it ready to go? Do you have to do any adjustments or that going into the next phases?
Yeah, we were quite pleased with the draft guidelines. I mean, they're not perfect. There are a few small tweaks I'm sure we'd like to make, but there's nothing that's a showstopper in there. Nothing is very concerning. We think actually that those FDA guidelines are quite industry friendly, and our current Phase III plan aligns very well with those guidelines. We're not seeing any hurdles there. And maybe, George, did you want to comment on the guidelines? And I don't want to take up all the air space here.
Look, Doug, I think you covered it well. No cause for concern on what we're doing. We're very pleased to see those guidelines. I think it's very much in line with what we're expecting. You know, with some comment, as Doug said, I think it places us well for our next stage of development.
Great. Thank you.
Great. Thanks, Luis.
Our next question is from Ross Fladlien with Canaccord Genuity. Your line is now open.
Hi, this is Ross Fladlien, and I'm actually on for Sumant Kulkarni. And I actually had two questions, so I guess we'll start off with the first one, which is, given the stage of Small Pharma's programs, I was wondering which product or programs you would prioritize and why?
Well, I think, and I'll let George answer this too. Small Pharma has already indicated that they'll be prioritizing the deuterated program over the regular program. What is great though is that the regular DMT has read out in patients with MDD, with data out to six months, which is a really strong proof of concept for deuterated DMT. So, as we read out our Phase I packages data in the fourth quarter, we'll take the decisions as to which programs and then which indications and which formulations we'll move into Phase II in early 2024.... That's right.
Thank you.
I'd also add, I mean, on the SPL026, so for native DMT, we're also expecting our data soon for drug- drug interaction study with SSRIs. I think that'll be very informative, also for the development plan and also highly relevant for deuterated DMT.
Thank you. And then, like a quick follow-up, too, is that just as we're getting closer to the phase IIa efficacy data on CYB003, is there, with the proximity of this transaction to that data set, is there anything like we should look at in terms of, like, read-throughs, if any?
Well, we expect the full data readout from all of the cohorts for CYB003 in the fourth quarter. We may have some interim data we release in the interim as we look at some of the earlier cohorts. If you recall, we've been dosing three cohorts of MDD patients. Two cohorts at 12 milligrams. We have that data in hand and looking at the analysis of it, since we're still being scrubbed. Then we're continuing to dose the final cohort with 16 milligrams, and that'll contribute to the full data readout later. So we may have a couple of opportunities for data in the next few months.
Great. Thank you.
Excellent. So, thank you everyone for joining. I'm sorry, operator, go ahead.
Once again, if you'd like to ask a question, it is star one on your telephone keypad. There are no more questions, so I'll pass the call back over to the management team for closing remarks.
Thank you very much. It's a little bit premature there, but, thanks for all the questions. Thanks for joining, George and I, on the call today. Obviously, we are very excited about this combination and the opportunity to bring together the tremendous amount of work that we've each been doing in parallel. It's quite remarkable really. Putting the two teams together means that we've essentially had two parallel groups working on the same or similar projects. And that's created a huge amount of potential efficiency and obviously a much broader, robust data set than each of us has individually.
In addition to that, of course, putting the two, the two programs together means additional value, catalysts coming from the Small Pharma study with SSRIs, that's coming up shortly, and the Phase II CYB003 data that's coming in the next few months, as well. So I think lots, lots more news to come. And we'll be updating you as we get closer to closing. So thank you for joining.
That concludes the conference call. Thank you for your participation. You may now disconnect your lines.