Field Trip Health Ltd. (NASDAQ:FTRP) Q4 2022 Earnings Conference Call June 30, 2022 8:30 AM ET
Company Participants
Kathleen Heaney – Investor Relations
Joseph Del Moral – Co-Founder and Chief Executive Officer
Ronan Levy – Co-Founder and Executive Chairman
Donna Wong – Chief Financial Officer
Paula Hewitt – Vice President and General Counsel
Nathan Bryson – Chief Scientific Officer
Conference Call Participants
Andrew Partheniou – Stifel
Patrick Trucchio – H.C. Wainwright
Elemer Piros – ROTH Capital Partners
Michael Okunewitch – Maxim Group
Operator
Greetings, and welcome to Field Trip Fiscal Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Kathleen Heaney of Investor Relations. Thank you. You may begin.
Kathleen Heaney
Good morning and welcome to Field Trip’s fourth quarter earnings conference call. Before we begin the call, I am obligated to remind everyone that during the course of this conference call, management maybe making some forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These results are outlined in the Risk Factors section of the company’s filings and disclosure materials.
Any forward-looking statements should be considered in light of these factors. Please also note a 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. Presenting today will be Joseph Del Moral, Co-Founder and Chief Executive Officer, Ronan Levy, Co-Founder and Executive Chairman, and Donna Wong, Chief Financial Officer.
I will now turn the call over to Joseph to begin today’s presentation with an update on the spin-out transaction.
Joseph Del Moral
Thank you, Kathleen and welcome to everyone joining us this morning. As previously disclosed, the strategic review confirmed that both divisions of Field Trip are equipped and ready to successfully operate as independent companies with distinct strategies, dedicated management teams and the capital resources required to execute on the respective business priorities.
We are pleased to say that we are nearing the finish line. This past Monday, shareholders approved the arrangement and concurrent financing, thereby approving the spin-out transaction. Subject to completion of the arrangement, shareholders also approved the Field Trip Health and Wellness equity incentive plan and authorized Field Trip Health and Wellness to reserve and delight for issuance and issue upon the exercise of options up to 10% of the number of common shares in Field Trip Health and Wellness issued and outstanding from time-to-time on a non-dilutive basis. And just yesterday, we received the final court approval for the spin-out transaction.
Closing of the arrangement remains subject to regulatory approvals, including conditional listing approval by the TSX Venture Exchange. It is expected that the closing of the arrangement will occur on or around August 2022. At that time, the individual companies will be named Reunion Neuroscience Inc., a drug discovery business which will continue to focus on the research and development of novel psychedelic molecules such as FT-104 and Field Trip Health and Wellness, which will house the clinics and technology business and will continue to focus on developing proprietary, competitive and differentiated psychedelic assisted therapies through innovation and therapeutic protocols.
On closing, it is expected that each share of the company will be exchanged for one common share of Reunion and approximately 0.86 common shares of Field Trip Health and Wellness. Additionally, Reunion will remain listed on the NASDAQ stock markets and Toronto Stock Exchange and Field Trip Health and Wellness subject to exchange approval will list on the TSX Venture Exchange. We are pleased to secure the financing to execute on our plan given the current challenging market environment. Concurrent with closing of the spin-out transaction, Field Trip Health and Wellness is expected to complete a series of private placement financings for gross proceeds of $20 million led by Oasis Management Company and Field Trip. This is expected to be sufficient to support the growth of the business as well as enabled the company to reach breakeven. Now, that the spin-off has been approved by the shareholders as we undertake a separation, it is key that we preserve the synergies that currently exist as well as the wealth of knowledge that we have accumulated over the past 2 years. We are now focused on the future for the separate drug development and clinics businesses and allowing them to execute on the respective strategic priorities.
I will now hand the call over to Ronan to provide an update on Field Trip Health and Wellness.
Ronan Levy
Thanks, Joseph and welcome everyone. Throughout the fourth quarter, the clinics achieved operational efficiencies, increased customer reach and patient throughput along with launching innovative strategic partnerships offered new psychedelic-assisted treatment options. In turn, we are pleased to see ongoing sequential growth in patient revenues in the quarter, which were up 27% to $1.72 million. On a year-over-year basis, revenue was more than 3x higher than the same period of the prior year.
During the quarter, we opened 2 clinics, one in Vancouver, British Columbia and the other one in Washington DC. Coming out of the strategic review and with the increased emphasis on client acquisition through digital platforms as well as ongoing efficiency improvements, we made the decision to defer the opening of new clinics, which currently stands at 12 in total. Subsequent to quarter end, we launched Field Trip at Home powered by Nue Life which provides ketamine treatments from the comfort of a person’s home, which is an alternative to in-clinic care. With this relationship, we now offer increased accessibility and convenience for those interested in pursuing the successful treatment outcomes of ketamine therapy, outside of a clinic setting through Nue Life’s at-home and telehealth offerings.
We are proud that our Field Trip Health Centers have played a pivotal role in providing access to ketamine and psilocybin assisted treatments and have helped change the lives of those living with depression, anxiety and other mental health conditions. Over the coming months, you’ll start to see an evolution in the business strategy for the clinics division as it becomes Field Trip Health & Wellness. The focus to-date has been on validating that psychedelic assisted therapies can be safely, effectively and viably offered as a therapeutic option for the millions of people who struggle with mental health challenges. And of course, we will continue to build upon our strong foundation as a leader in the industry with a focus on growth and client numbers while also implementing further operational improvements to scale our physical footprint efficiently.
However, now there will be a new emphasis on expanding the Field Trip ecosystem in a capital efficient manner. This will include building on the successful launch of our Field Trip at Home program and a greater emphasis on our digital tools, particularly our Trip App, which will start to play a much more central role as the conversation around psychedelics emerges from a third line treatment in treating DSM-5 diagnoses to a much more social and cultural conversation. The opportunities in the psychedelic industry as it continues to evolve are near boundless and with Field Trip Health & Wellness, we plan to be at the forefront of the most exciting ones.
I will now turn the call back to Joseph to provide an update on the drug development side of the business.
Joseph Del Moral
Thanks, Ronan. During the fiscal fourth quarter and full year 2022, we continued to advance our important drug discovery work. We are leading the development of the next generation of custom synthetic molecules targeting serotonin 5HT2A receptors with FT-104, our first drug candidate in development. FT-104 given the name Isoprocin Glutarate is anticipated to produce a psychedelic trip of about 2 to 3 hours, significantly shorter than other molecules currently in clinical trials.
The structure of FT-104 is based on classical serotonin 2A psychedelics like psilocybin, which have been reported to be useful in treating a variety of mood disorders, including depression, anxiety and substance abuse. We completed Phase 1 enabling studies for FT-104 earlier in the year and have entered clinical stage development. During the fourth quarter, we entered into an agreement with an Australian Clinical Research Organization to perform a Phase 1 trial with the objective of studying the safety, tolerability, and pharmacokinetics of single escalating doses of FT-104 in healthy human volunteer participants.
Additionally, exploratory objectives include characterization of the intensity, duration, and subjective feeling of the psychoactive experience produced by the study drug. The Phase 1 protocol was developed in collaboration with our CRO and our clinical advisory team was approved by the Human Research Ethics Committee and is being implemented at the clinical trial sites, where screening and recruitment have begun. Dosing of participants in the study is expected to begin shortly. An important event, subsequent to quarter end was the granting of the patent for claims related to FT-104 with protection to at least mid-2040. The patent application grants exclusive rights to Field Trip for the composition of matter, formulations, methods of use, and methods of manufacturer for a family of hemi-ester compounds of hydroxytryptamines, including Isoprocin.
During the quarter, we also progressed with our FT-200 Molecule Group. Our research has revealed that candidates in the FT-200 Group are demonstrating interesting pharmacological differences with classical psychedelics. This may potentially make them safer serotonin 2A agonists with a broader use potential in mental healthcare. Furthermore, by decreasing the relative activity of the serotonin 2B receptor, we are aiming to improve their cardiovascular safety profile. Molecules with the ability to selectively activate the 5HT2A receptor, but not the 5HT2B receptor could potentially be used as medications for depression or anxiety, but in a manner more closely resembling traditional pharmaceuticals with, for example, at-home daily dosing.
I will now turn the call over to Donna to discuss our financial results.
Donna Wong
Thank you, Joseph and good morning everyone. As a reminder, all figures that I will be discussing are in Canadian dollars in the fourth fiscal quarter and fiscal year 2022 corresponds to the 3 and 12-month periods ended March 31, 2022.
During the fourth quarter, we earned patient services revenues of $1.7 million from our 12 clinics, an increase of 228% over the comparative quarter in the prior year. The Washington, D.C. clinic began generating revenues in March of this year. By contrast, fourth quarter 2021 patient services revenues were generated from 5 clinics and amounted to $526,000. We are pleased with the 26.7% sequential increase in revenues. This was due in part to the 1 additional clinic as compared to the prior quarter as well as the steps the company has taken to further improve and increase throughput as Ronan mentioned. For the fiscal year, revenue was $4.7 million, an increase of 406% over fiscal 2021. This reflects the increase in the number of clinics we had 12 in the most recent year compared to 3 in the prior year.
Moving now to a discussion of cost, our efforts to streamline operating costs are well underway and we are beginning to see evidence of that improvement on a sequential basis as fourth quarter total operating expenses were 8.3% lower than the third quarter, while at the same time we grew revenue 27%. On a year-over-year basis, total operating costs in the fourth quarter were $14.3 million, up from $7.7 million in the same comparative period and reflects our investments in growing and scaling both our clinics and drug development businesses. The amount expended for fiscal year 2022 was $58 million compared with $20 million in the comparative year, with the increase reflecting the items I just mentioned as well as an increase in sales and marketing and R&D costs.
General and administration expenses of $7.4 million are our largest operating expenses and were up from $4.1 million in the same quarter of the prior year. The increase was primarily due to operating costs reflecting the larger number of clinics operating in the quarter as compared to the prior year and an increase in public company related expenses. G&A costs in the quarter also included non-cash items comprised of share-based payments of $1.3 million, G&A of $1.1 million and one-time cost associated with the spin-out transaction of approximately $900,000. Total G&A for the fiscal 2022 year end was $32.3 million, up from $10.5 million in fiscal 2021 for the reasons I just mentioned.
Patient services expenses of $2.7 million and $9.2 million for the fourth quarter and full year respectively compares with $1 million and $2 million for the comparable periods in fiscal 2021. The increase reflects the larger number of clinics in operation. Our fourth quarter R&D costs were $2.3 million, an increase of 153% over the prior year, primarily due to ramping up of development costs as we work to further progress the development of the active ingredient FT-104 as you just heard from Joseph. R&D cost of $7.3 million for the full year reflects the continued investment as we enter the clinical stage of development and prepare for Phase 2.
In line with the actions we have taken to improve efficiencies, marketing costs of $400,000 in fourth quarter 2022 was 39% lower in the same period of the prior year, primarily reflecting lower branding and public relation fees. On a full year basis, sales and marketing expenses of $3.9 million reflect increased paid social search and public relations expenditures to build patient interest and our brand. This had the desired results as we saw steady growth in client acquisitions and patient services throughout the year.
Now turning next to the balance sheet, Field Trip at year end had unrestricted cash and cash equivalents of $64 million following our $9.8 million capital infusion into the standalone clinics business on a pro forma basis upon closing the cash position for Reunion. Our new name at that time is estimated at $42 million to support our ongoing drug discovery work.
This ends our prepared remarks. I will now ask the operator to open the lines for the Q&A session.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first questions come from the line of Andrew Partheniou with Stifel. Please proceed with your questions.
Andrew Partheniou
Hi, good morning. Thank you for taking my questions.
Joseph Del Moral
Good morning.
Andrew Partheniou
Maybe the first – good morning. The first thing I’d just like to touch on and I am not sure if I heard correctly, Donna, my phone cutoff there, I think you mentioned $42 million in pro forma for Reunion post the spin-out transaction.
Donna Wong
Sorry, Andrew, $40.2 million.
Andrew Partheniou
$40.2 million. Okay.
Donna Wong
Yes.
Andrew Partheniou
Could you talk a little bit about how long or what do you think that cash will enable you to achieve in Reunion? In other words, what do you expect your cash burn to be in Reunion and on the other side of the coin for Field Trip Health & Wellness, where do you expect your pro forma cash position to be post the spin-out? And again, what do you think the cash burn will be in Health & Wellness and where do you think or what do you think that cash will enable you to achieve?
Donna Wong
Okay.
Joseph Del Moral
Yes, it’s Joseph. I can maybe answer about Reunion or we expect to be able to achieve with the cash and Donna jump in with any additional commentary. But the cash we will have with at Reunion when we effect the separation will get us through our Phase 1 trial, which we expect to have data by the end of this year and set us up in that position and also do all the preparatory work to get ready to run our Phase 2 trials next year do our pre-IND and meetings and get everything kind of lined up for our Phase 2, also set us up to have the cash runway we need to do a fundraise prior to starting the Phase 2 to fund the Phase 2 trials. So we will have more details about exactly how much runway that is and timelines and milestones as we get further along, but it sets us up well to get all the data we need for our Phase 1 and prepare everything we need to launch the Phase 2 and then do a successful fundraise for our Phase 2 trial before starting Phase 2.
Donna Wong
Okay. On the Field Trip Health & Wellness side, upon the close of transaction, the clinics business will have $20 million in gross proceeds to fund the operations on ongoing basis. The company believes based on our current fiscal forecast our current revenues, but that funding should be sufficient to take us through to profitability.
Andrew Partheniou
Thank you very much for that. And could you talk a little bit about the Reunion Phase 1 that has already started? I believe you mentioned recruitment is ongoing and dosing should start shortly. Can you talk a little bit about, how is recruitment going, what are you seeing thus far? Is there a lot of interest in participating in a trial like this any kind of color like that would be useful?
Joseph Del Moral
Sure. I will hand that call – that question over to Nathan.
Nathan Bryson
Yes, good morning, Andrew. Yes, we started advertising only a couple of weeks ago and we have had hundreds of inquiries. So right now what we are doing is running through those and selecting out the eligible candidates and getting them into screening as fast as possible, so that we can get them scheduled for dosing. So, it does seem quite – there is an avid appetite for participating in this study.
Andrew Partheniou
That’s great. And just on the clinics side last question for me is there any kind of color that you can provide on where you are in terms of profitability? Namely, your oldest clinics, which are typically the ones that perform the best and how do you think that the Nue Life partnership will play a role in helping you achieve that profitability milestone?
Joseph Del Moral
Andrew, I will hand that over to Ronan to answer.
Ronan Levy
Yes, thanks, Andrew. I mean, you’re spot on when it comes to the growth of the clinics, the oldest clinics are certainly achieving capacity faster than the younger clinics and they all seem to follow the same general trajectory of growth. We haven’t specifically outlined individual by clinic profits or anything along those lines, so to be able to be conscientious about what we say. But the trend lines kind of continue in the same direction. And in some cases, I think that the growth in the established clinics may actually be accelerating, so that’s positive. In terms of the Nue Life partnership, it’s only been about six weeks since it’s launched. So, it’s hard to parse out exact details other than to say, we are seeing very positive early signs of it in terms of the conversions of patients that go through us and ultimately land into the Field Trip at Home powered by Nue Life offering. And we think it’s an excellent opportunity, because there is virtually zero capital outlay. And it’s a way to monetize the awareness that we generate to people who aren’t in the geographic jurisdictions of our clinics. So, initial signs are very positive and encouraging, but it’s still very early days, so we can’t offer too much insight that right now.
Andrew Partheniou
Thank you very much for that and I will get back into queue.
Ronan Levy
Thanks Andrew.
Operator
Thank you. Our next questions come from the line of Patrick Trucchio with H.C. Wainwright. Please proceed with your questions.
Patrick Trucchio
Thanks. Hi, good morning and congrats on all the progress. I have a few follow-up questions on FT-104. I guess just first, just regarding the clinical path forward, can you tell us what you are looking to see in this Phase 1 data from a PK and safety perspective, but also from the psychedelic experience perspective, that would give you confidence to move ahead to the Phase 2 in PPD.
Ronan Levy
Good morning, Andrew. Sorry, Patrick. Yes, what we are looking for primarily, of course, we expect to see safety, we want to see that there is no adverse events that are going to cause us from being able to use the doses that are psychedelic in nature. We will be using standard questionnaires to get a measure of drug intensity and subjective experience to help us guide us in what produces the maximum experience without any safety concerns, as those will be the doses that we will be selecting most likely for use in our Phase 2 program. And so that’s really – the ultimate goal is to understand where our limits are, our upper limit of tolerability is and dose below that, that gives the highest psychedelic experience, but no untoward adverse event. And so that’s the key point that we will be looking for, of course, we always want to make sure that safety is primary for our patients, so that’s the biggest thing.
Patrick Trucchio
Got it. And then…
Ronan Levy
And then as for the – sorry, I was going to say I didn’t mention the duration. But of course the duration is the key component to what we want to be able to demonstrate, it’s the key component of what we were after in the first place is to demonstrate that as has been said by people who have used this in the illicit space that psychedelic experience is typically three hours.
Patrick Trucchio
Yes. That’s helpful. And then so if all does go as well, as expected, when would you anticipate the Phase 2 and PPD to be up and running? And can you give us some expectations around this program, including the potential differentiation from brexanolone, but also differentiation from other psychedelic programs that could emerge, such as 5-MeO-DMT?
Joseph Del Moral
Starting to Phase 2 will obviously be gated by the financing. So, the successful early financing, I think that our earliest start date would be Q3 ‘23. As for the design, I think I will wait until we have had some feedback from the FDA before we talk about that. But in comparison – most of the comparisons right now to the products such as brexanolone, would be theoretical, of course. But what we are trying to demonstrate is that in PPD, which is what we are going to study this drug. And that we could treat it another, have symptom relief within 24 hours, which is typical of most psychedelics and have a return to breastfeeding within that same timeframe, which differentiates from brexanolone, which right now is a 60-hour infusion and for which mothers are told to withheld – withhold breast milk for at least a week after those three days of continuous infusion. So, I think there is a big jump in convenience for mothers to have only a half day in a clinic and be able to return to normal life if you wish, rather than three days away in a hospital, where they are obviously seen as patients and not just as being treated quickly in a care facility that would only need them for half day. Those are the major concerns for – as of other psychedelics 5-MeO-DMT, if you are talking about GH Pharma, and they are potentially into PPD, I am not going to comment right now on that I have not much information to compare to yet.
Patrick Trucchio
Got it. And then if I could just one on the clinics in the separation. So, Reunion is expected to maintain equity ownership of 21.79% in Field Trip Health & Wellness. I am wondering if Reunion will have input into managerial decisions. And if it would have earlier, special access to data outcomes from psychedelic assisted therapies administered at the clinics?
Joseph Del Moral
So, as we mentioned before, we will be entering into collaboration agreement between the two companies that will maintain some of the synergies we have currently for having both of these divisions under one roof. So that would include access to anonymize sort of outcome information, data, access for preferential access to clinical trial sites and that sort of thing. In terms of managerial influence, or managerial decisions, that’s not expected, although we have the rights to appoint a Director to the Board. That would be sort of the path we choose to go on that front. But I will hand it over to Paula, do have any other comments otherwise…
Paula Hewitt
Joseph, thank you very much. You are entirely correct. As we are planning to have two agreements in place, one is a shared services, which will allow the two companies to leverage shared back office stuff for a period of time, but it’s not intended to be managerial in nature. It’s meant to be more fiscal and to smooth the transition. And Joseph has also correctly described the ongoing collaboration agreement that we intend intervention 2801 prior to closing. Thank you very much.
Patrick Trucchio
That’s helpful. Thank you so much.
Joseph Del Moral
Thanks Patrick.
Operator
Thank you. Our next questions come from the line Elemer Piros with ROTH Capital Partners. Please proceed with your questions.
Elemer Piros
Hello.
Joseph Del Moral
We can hear you now Elemer.
Elemer Piros
Yes. Sorry about that. I was fiddling with the phone. I just have a couple of leftover miscellaneous questions. Joseph, what do you envision that the headcount is going to be at Reunion and you get separate from Field Trip?
Joseph Del Moral
We have about 10 people who are working on the clinical development, CMC side and then a few people, sort of general corporate support, finance and legal and etcetera. So, it’s not a huge team. We obviously do leverage virtual, a lot of a – lot of our work is done virtually with CROs and consultants.
Elemer Piros
Okay. Thank you. And previously you mentioned that the Phase 1 of FT-104 will be also conducted at the Netherlands. Is it Australia only now?
Joseph Del Moral
That’s correct. We made the move to Australia, so the Phase 1 is Australia.
Elemer Piros
Okay. And besides the Phase 1 results, what else you might need to generate sort of preclinical data for an IND filing?
Joseph Del Moral
I will hand that over to Nathan.
Nathan Bryson
Hi Elemer. We actually have – we believe we have just about everything we need for an IND filing, else, we wouldn’t have been able to start the Phase 1 study in Australia. They also require a fairly hefty investigators brochure with complete preclinical tox data. However, we have worked with consultants to look at a Gap analysis. We have identified a couple of things that we feel that the FDA may request, in addition to what we have, those have been started. And then hopefully, we are going to go to the FDA in September. We will share with them what we have done and what is in progress, and seek their guidance as to whether anything else is additionally necessary prior to starting the Phase 2. And we will try to get it done before that July 2023 date if at all possible. Of course, it would have to be done before the Phase 2 unless we can earn other way. So, that’s the plan right now. Trying to get the FDA’s guidance based on what we have and what’s ongoing and then complete anything necessary before July 23rd.
Elemer Piros
Thank you very much Nathan and congratulations on the approval of the separation.
Joseph Del Moral
Thank you, Elemer.
Elemer Piros
Thank you.
Operator
[Operator Instructions] Our next questions come from the line of Michael Okunewitch with Maxim Group. Please proceed with your questions.
Michael Okunewitch
Hey guys. Good morning. Thank you for taking the questions.
Joseph Del Moral
Good morning.
Michael Okunewitch
I guess to direct my first one to Ronan maybe to talk a bit more about the logistics of the at Home program. Regulatory wise, how does that work given that ketamine is a scheduled substance and it’s an off-label treatment. And how does at home impact your treatment capacity?
Ronan Levy
Sure, and I will – Paula to offer any additional comments I don’t touch on. From a regulatory perspective, there is nothing particularly unique about the at Home offering physicians and other qualified prescribers are able to prescribe ketamine, provided they have the DEA license. And there has never – as far as I know, there has never been a requirement to have it administered in-clinic. So, the at Home program, it’s just working within the normal confines of prescribing ketamine and the delivery and or administration of ketamine. There is nothing particularly unique about that the way its set up from our perspective in terms of the patient relationships between us and Nue Life. Essentially, Nue Life is the provider of care and so all kind of regulatory compliance considerations reside within Nue Life. Of course, within the contractual arrangements, they are obliged to comply with that. And in fact, they have been very good partners in terms of updating and modifying their process actually, to comply with some recommendations that pull up that’s mentioned, as well as our medical teams mentioned, in terms of best practices. So, from a regulatory perspective, there is not actually very much that that’s unique and in fact in terms of liability risk assessments. The bulk of the liability would otherwise revived with Nue Life as each person who goes through it is officially a Nue Life patient. In terms of capacity at our clinics, this certainly expands our capacity. One of the things that we become aware of is that our brand reach is quite substantial. We generate many, many website visitors per day, but in part because of the geographic limitations of where our clinics are located, we can’t serve as many people and so we do believe that this is going to extend the reach of people who we are able to treat through Field Trip. And we don’t anticipate that there will be too much diversion of people who opt in for the at Home program versus the in-clinic program. It is too early to say, but by and large, we believe that it is really serving different audiences or that some people who come in from the in-clinic experience may after completing the treatment protocol with us may choose to do it at home as a continuation of their care just given the facility it provides. But again we are just getting initial feedback now, so it is too early to provide too much guidance on that.
Michael Okunewitch
Alright. Thank you very much. Appreciate the additional clarity. A little bit to change topics have been asked about PPD, in particular, how frequently do mothers with PPD seek treatment as opposed to kind of waiting out? Would you expect that program to require significant patient outreach and education or is there a built up desire in that market for better treatments given the significant unmet need?
Joseph Del Moral
Yes. Good morning. We do believe that there is pent up need that we can address. I think that’s evident and sometimes the speed at which patients have been recruited in prior studies. But I will say also that I – my brain just bumped. I lost track of where we are headed on this, sorry.
Michael Okunewitch
Alright. No problem.
Joseph Del Moral
Michael was there a follow-up on that.
Michael Okunewitch
Yes. Sorry. I just have one more question regarding clinical trial cost, specifically how much you are expecting the Phase 1 to cost you, particularly given that Australia is generally pretty affordable for clinical trials?
Joseph Del Moral
I just remembered where I was headed. I am sorry about that. Just as a note, we are fully expecting a lot of that patient outreach to be started by our competitor, who is already in the field and is actually doing a lot of that outreach and market building. So, I think we will be able to benefit from that. Sorry, about that, I just caught a pause in my brain. As for Australia, yes, we reached out to Australia because we could actually save some time, relative to go into the U.S. There can be delays of three months to six months, typically in getting study studied in the U.S. in terms of getting an IND up and running. That’s why we reached out to Australia. There is also the additional setting up a structure to recover research, fund expenditures, spending. And we have done that to try to capture some of the costs back from the study we are currently running.
Michael Okunewitch
Alright. Thank you very much.
Joseph Del Moral
Thank you.
Operator
[Operator Instructions] There are no further questions at this time. I would like to turn the call back over to Ronan Levy for any closing comments.
Ronan Levy
Thank you, operator, and thank you to our investors for the support and to all the analysts for the calls, for the questions today. We are confident that the future of our drug development and clinics businesses will each be strengthened as separate entities. We are focused on continuing to foster innovation and developing innovative psychedelic assisted therapies for those suffering mental health conditions, while also setting the companies up for long-term success and increased shareholder value. With that, I will ask the operator to close the lines.
Operator
Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
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