Super. Well, good morning, everyone. Thank you for joining me today for this fireside chat with the CEO of Helus Pharma, Michael Halstead. Let me quickly read the Morgan Stanley research disclaimer. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Michael, thank you very much for joining us this early in the morning. Before we get into the details, perhaps you can give us a bit of background on Helus Pharma and where the company is today.
Sure. And thank you, Rebecca. Thank you, everyone, for joining us today. Certainly excited to talk about Helus Pharma. I'm Michael Halstead, the new CEO of Helus. I joined in early August. Helus Pharma is developing treatments for several mental health indications. We're developing novel serotonergic agonists. Our lead program, our first phase III readout, expected in the fourth quarter of this year, is the molecule is deuterated psilocin. It is in development for the treatment of adjunctive major depressive disorder, MDD. Very excited about that program, that indication in particular. Hopefully, we'll get into that as we progress. Mid-stage program we have as well is our HLP004 program. That is deuterated DMT, the molecule, and that is for the treatment of generalized anxiety disorder. A very important indication there with a real unmet need. We, in the beginning of this year, completed a phase II signal finding study.
We've told everyone that we're finalizing the clinical trial design for the next study in that program this quarter, and we'll be rolling details of that out very soon. The earlier stage program in the platform, and I like to emphasize this is a platform, late stage, mid-stage, and early stage, is our HLP005 program, which is a library of compounds, preclinical, but I think have real potential in a number of mental health-related indications. We're going to be expecting to move the lead molecule in that program forward in 2027. A lot going on. Obviously, a big near-term catalyst with the expected phase III data in Q4, but just really excited about the potential that the company has to make a real positive impact in the treatment of mental health.
You mentioned you joined in early August, not that long ago. What was it that drew you to Helus Pharma?
Sure. I have been in and around industry for about 25 years. Most recently, I was with Intra-Cellular Therapies, a CNS-focused company, had developed antipsychotics for a treatment of adjunctive MDD that was acquired by Johnson & Johnson in 2025. I was in the fortunate position then of having the opportunity to be very thoughtful, selective about what it was I wanted to do next. Saw the opportunity with Helus to make an impact in, again, very important area, mental health, all the real unmet need. The company is doing just some really great work. I did, I would say, a very similar diligence exercise to what investors do when they look at a company.
I looked at the potential of these assets, the likelihood of success. Obviously, you can have the greatest assets, but if you can't get them to the finish line, then you can't do what our real mission, what we really want to do, make that real patient impact, provide that patient benefit. Then looked at the quality of the team that we have at Helus. All of those things checked out for me, and especially as I look at the phase III program in adjunctive MDD, and really the platform that the company has the strong IP underneath to support long-term development, long-term commercialization. I just think that real potential with the company, and so I decided this was a place to devote my time, my energy.
You've had a month to get your feet under the table and get acquainted with the company. What are your priorities now going forward?
Three words and they're all the same. Execution, execution, execution. Obviously, we need to read our data out in Q4 with our late-stage phase III program in adjunctive MDD. Continuing with that focus on execution, both from the clinical development perspective, not only with our 003 program, but the other programs I referenced in the platform. Also in parallel with that, all of the infrastructure building at an appropriate scalable pace, so that we are prepared as we hopefully achieve these various clinical milestones to then support ultimately successful commercial launch.
That makes sense. HLP003, it is being advanced and tested as an adjunctive MDD treatment. What is the rationale for going after the adjunctive route? Why not go after bigger indication like TRD, for example?
Well, actually adjunctive MDD is the broadest indication.
Right.
I should have said it up front as I was evaluating the company, I really liked the choice that they made, obviously predated me, of focusing on the adjunctive MDD space. If you think about the major depressive disorder population, there is approximately 23 million people suffering from MDD in the United States. Of that 23 million, approximately 70% are on standard of care. That is your SSRIs, your SNRIs. Of that 70%, approximately 2/3 are not getting optimal benefit.
That is really high.
From standard of care. Yes, and they're very high numbers. The way, in terms of how clinicians approach treating depressed patients, adjunctively you have the option. So you have someone, they're not getting optimal benefit on standard of care, but hopefully they're maybe getting some benefit, right? You have the opportunity adjunctively to add a therapy on. You don't have to wash the patient off of drug as you would if you restarted with a monotherapy. That's a four to six -week process, and then you're giving them a monotherapy, and different patients react differently. So you're really starting over. Adjunctively, you continue on that path to remission.
You're adding on to standard of care, hopefully providing that incremental benefit that the patient needs to get them to remission. You're getting them, importantly, before they get to treatment-resistant depression, which is the end of the spectrum. That's multiple failures on other therapies. That population is about 3 million or so patients. So we're really focused on that broad swath and really helping these patients continue that journey towards remission. I think it's a great indication. You're able to access that broad patient population and again, really help them continue that journey to remission hopefully.
So capturing them a little bit early and actually keeping them functional and living their everyday life.
Absolutely. It really fits with how clinicians approach treating these patients in the real world in their practices.
Makes a lot of sense. Perhaps you could spend a couple of minutes just walking us through the design of the HLP003 PARADIGM study.
Sure. The PARADIGM program is probably the right way to characterize it. It is a full phase III program, as you would expect. We have the two pivotal trials. The one that I was referencing that we anticipate will read out in the fourth quarter of this year is our APPROACH trial. We recently, end of July, announced completion of enrollment. That's 223 patients, if I remember the number correctly. It's a two-arm study, 16 mgs of deuterated psilocin, and then placebo. The primary endpoint is at six weeks. Patients get two doses of the active, one at study start, one at week three. Then you measure efficacy at week six. This is on the MADRS, the applicable depression scale. Then as a secondary endpoint, you're measuring again at week 12 to show durability of effect.
Then there's also our then second phase III, second pivotal, that is our EMBRACE study. That is a three-arm study, a target of 330 patients. That is 16 mgs, an intermediate dose of 8 mgs, and then placebo as well. Then, of course, we have the long-term extension study. These patients have the opportunity to roll over from the two pivotals. You get long-term safety efficacy data over the course of the year. That full package that you would expect to support an NDA filing. We've guided to anticipated NDA filing in 2028.
Right. Okay.
We have breakthrough therapy designation from FDA for this molecule. With the rolling submission process, we would also then anticipate, if all goes well, approval in 2028 as well.
Okay. HLP003 in MDD, the company's developing it as an adjunctive therapy rather than a monotherapy. You've already touched on some of the reasons why, like not having to have that long washout period, m aking sure patients don't start to go into remission. As a fresh pair of eyes coming into the company, do you think that's the right strategy?
Absolutely. I spoke to the treatment paradigm, your ability then adjunctively to access this broad patient population continuum, hopefully on that journey towards remission. Really, if you look at then the product characteristics of HLP003. Now, we completed a phase II, really saw incredible data. When I first saw, growing up in the antipsychotic world, where those are prescribed adjunctively, do provide some benefit, but also obviously there is the side effect burden that is pretty well-known that is associated with the antipsychotics. If you look at HLP003 and the data that we saw in the phase II, which obviously has to translate to the phase III, we all know that clinical path. But if you look at the starting point, really just impressive efficacy data. Saw 13- 14 points of improvement o ff of one dose, that was the primary endpoint at three weeks.
Then added a second dose as an extension, saw another five points of improvement on a raw basis. So in terms of potential efficacy, great starting point, great signal, right? Then durability of this treatment off of those two doses, s aw durability out to a year. So the remission, the responder rates, 100% responders to the treatment, showing the requisite improvement on the MADRS scale. Then north of 70% remission, these people really, really benefiting from the therapy over that long term. Then a very favorable safety and tolerability profile. Adverse events were mild to moderate, transitory really on the day of treatment, and no SAEs, severe adverse events, associated with the drug. You put that profile together in this indication of adjunctive MDD, as I said before, it's just a, I think, really promising approach.
You've touched a little bit on kind of the clinical results that you've seen so far based on the efficacy, but also the durability of the drug. What do you think is a clinically meaningful kind of MADRS difference in the upcoming trial?
Sure. Again, I would reference, what are clinicians using now?
Yeah.
On an adjunctive basis, they're prescribing the antipsychotics that are indicated for the adjunctive treatment of MDD. They're drugs that have seen two to four points of improvement on the MADRS scale, absolutely approvable. Clinicians are using those drugs, and commercially, they're doing quite well. If you see four to five points of improvement on the MADRS scale, that's a strong drug candidate. My prior company, CAPLYTA, we saw four to five points there, again, as an antipsychotic with that side effect profile. Again, very strong product. If you think from a clinician's perspective, let's say that four to five points, certainly that's viewed as a strong efficacy position.
Then together with the other two key characteristics, right? That durability that I referenced before, as well as the safety profile. I think from a clinical perspective, I would be very excited about those product characteristics if that is what plays out as we go forward. Obviously, if you end up with more than that four to five points, you are in rarefied air. That is really, really amazing. We will have to see our phase III, but again, as I said, I really like the point we are starting from.
What is going to be to the extent you can talk about what is going to be disclosed in 4Q around the APPROACH trial?
Sure. I think it will be the standard top-line data readout that people would expect. Obviously, we will disclose the data around the primary endpoint, the key secondary, which I referenced, out to 12 weeks. We will also, of course, disclose the usual safety data as well in that top-line readout. Then, as we get more data from the trial, that will then be communicated out at various medical conferences as we progress. People will get the full picture here.
Great. Moving on from HLP003, let's touch on HLP004 and generalized anxiety disorder. What can we expect next? You already mentioned in process of phase III, but what do you see as the next kind of milestone?
It is a phase II program. As I said, we did have a phase II signal finding study that was completed in the early part of this year. The company has also done a number of earlier studies to characterize the molecule, the potential benefits, and chose the generalized anxiety disorder indication. Again, an indication that there is an incredible unmet need here. You haven't seen really any innovation with respect to that indication in a very, very long time. Standard of care, there's just really an unmet need. That patient population, depending on what figures you look at, around 20 million patients in the U.S.
Again, another one of these very significant, important mental health areas. Really glad that we're focusing there. Based on all the work the company has done as well as the most recent signal finding study, definitely believe that this program has promise from a patient benefit perspective, that it's worthy of our investment, of our focus. As I say, stay tuned. We will roll out details on the design for the next clinical trial very soon and look forward to having a more fulsome discussion on that because I do think it's a great program.
Super. There's obviously been a number of acquisitions recently in the CNS space and within the neuropsych space. What do you think large pharma is seeing now that it wasn't previously willing to underwrite?
Sure. Look, I think obviously the CNS space has been a focus of large pharma for quite some time. In terms of our space, the psychedelic space, you are now seeing, most recently, Lilly acquiring Atai. You have also seen various other large pharma focus in different ways in this space. I think this is representative of a number of things. Obviously, we have had great positive developments, the work that we are doing, the work that our peers are doing, to really validate that these drugs have potential to make a real positive patient impact.
You have FDA recently came out with guidelines that sort of clear path to what the expectations are towards approval. Then you have the Lillys of the world coming in, they are very measured. They do their diligence. Obviously, they came to the conclusion that there is a very real patient benefit here, that there is a pathway to approval for this class of drugs. The potential clinician acceptance, and then a commercial model that works, both from an infrastructure perspective, from a reimbursement perspective, that it was worthy of their time, their investment. I think that that, again, just great validation of the space furthers this momentum, this growing recognition of the potential patient benefit here. So I think it is all good for the space overall.
Super. Any questions from the audience? No? Michael Halstead, you were clearly obviously very super clear and very comprehensive. So thank you very much for your time today and joining us here at the Morgan Stanley 24th Annual Global Healthcare Conference. I think it goes without saying that it is an exciting couple of months ahead for the company, and I am definitely looking forward to seeing what is probably one of the most highly anticipated phase III readouts that is remaining in 2026. So best of luck.
Thank you very much. We are obviously very excited about it. Look forward to sharing more, and thank you everyone for your time.
Thank you.