As we move into the 2nd quarter of 2023, we take a look at Q1 and other trends in the psychedelic medicine sector
The Psychedelic Renaissance is in full swing. Classical psychedelics and their derivatives are finally being recognized as innovative treatments for diseases including, but not limited to, mental health disorders. Advancements in neuroimaging and clinical trials methodologies have allowed scientists to revisit “psychedelic studies” conducted in the mid-20th century, delving deeper into the neurobiological underpinnings of psychedelics and their therapeutic effects.
At the same time, increasing positive sentiment among law enforcement and drug regulatory agencies have facilitated access to research and the therapeutic use of psychedelics, leading to significant R&D milestones being achieved in the last year.
For instance, depression trial starts were 68% higher in 2022 than pre-pandemic, with ~25% of these involving either a serotonergic or NMDA psychedelic.
Just last month, we saw Australia’s Therapeutic Goods Administration (TGA) permit specialized physicians to prescribe psilocybin and MDMA with psychotherapy for the treatment of TRD and PTSD respectively, a scheme that aims to be effective from July 1 this year. While many saw this as a watershed moment for enabling access to psychedelic medicine, the move was also met with “serious reservations” from clinicians and some industry experts, who believe the decision is still premature given the unknowns around commercial supply, lack of standardised treatment protocols, and an “overstretched” physician workforce.
In addition, Australians might have to pay out-of-pocket costs of around $25,000-$35,000 for treatment; and with no forms of government subsidy planned for the initial stages of rollout, there are concerns about how accessible psychedelic therapies will be once the scheme gets underway.
Nonetheless, it’s clear we’re observing a prominent shift from academia towards healthcare as drug developers push to make psychedelic therapies available to patients suffering from hard-to-treat neuropsychiatric diseases.
For instance, we’ve seen the rise of specialist, psychedelic-focused clinical research organisations, such as Clerkenwell Health, that aim to expedite clinical trial delivery and other R&D processes for psychedelic drug developers. In addition, an increasing number of initiatives, such as EU-focused PAREA, have emerged with commitments to streamline the integration of psychedelic therapies across healthcare systems by increasing collaboration between manufacturers, scientists, and policymakers.
With MAPS expected to file an NDA submission to the FDA for MDMA-AT in Q3 2023, and with Compass Pathways’ Phase 3 program of psilocybin-based COMP360 now underway, psychedelic therapies could be available in global markets as early as 2024, warranting a transparent, effective, and international legal framework for their access once they become available.
While Australia’s decision to reschedule psilocybin and MDMA was supported by a wealth of evidence for their potential benefits in these conditions, including MAPS’ recently completed Phase 3 program, we still don’t fully understand their therapeutic mechanism of action.
Establishing causal links between the receptor activation profiles, subjective effects, and neuropsychiatric outcomes of psychedelics are extremely difficult, due to their complex pharmacology and many poorly elucidated “downstream” effects of receptor activation. What we do know is that stimulation of the 5-HT2A (serotonin 2A) receptor seems to be a key factor in mediating the subjective intensity of the psychedelic experience and rapidly modulating neuroplastic processes in the brain. These processes, which include the disruption and rewiring of key neural circuits associated with ruminating behaviour, could explain why psychedelics provide almost immediate and long-lasting clinical benefits just after a single dose for some patients.
In fact, researchers are coming closer to elucidating these plasticity-promoting mechanisms. Key findings in a landmark paper published earlier in February suggest that location bias in 5-HT2A receptor signaling could be the answer as to why all serotonin receptor-activating molecules, including serotonin itself, fail to induce neuroplasticity deep in the brain when compared with “psychedelic” compounds. These researchers specifically found that a compound’s ability to promote plasticity was strongly correlated with its membrane permeability, i.e. how easily it can enter a nerve cell and activate 5-HT2A receptors from the inside. Mechanisms underlying neuroplasticity at the cellular level, which include dendritic growth and increases in dendritic spine density, are now well-understood and has led to scientists describing psychedelics as a subset of a larger class of psychoplastogens – drugs that produce rapid and sustained neuropsychiatric effects after a single administration.
While these mechanistic insights are important for guiding the discovery and design of more effective neuropsychiatric drugs, psychedelic therapy is not just a pharmacological intervention but rather a complex paradigm of preparation, administration, and follow-up sessions, which are accompanied or “assisted” by specialized psychotherapy. To determine how necessary the psychotherapy aspect of the treatment would be, investigators could in principle administer a psychedelic drug to an unconscious patient, either during sleep or under anesthesia – but such a study would be challenging in many respects.
This conundrum of whether the “trip” really is needed to produce a desirable therapeutic outcome continues to be the “golden” question for the industry. It has spurred debates between experts and key opinion leaders, with some academics like David Olson believing that overcoming challenging experiences, erected by psychedelic trips, are fundamental to their therapeutic effectiveness. However, drug developers and investors alike are betting on newer classes of psychedelics called next-generation psychedelics, compounds that have improved pharmacokinetic properties, reduced off-target toxicity, and have shorter “trip” times or are non-hallucinogenic compared to first-generation psychedelics. The latter would make psychedelic treatments more cost-effective by streamlining the amount of therapist exposure needed – particularly administration sessions which often require the accompaniment of at least one physician for around 6-8 hours, or even an overnight stay.
An overview of next-generation vs. first-generation psychedelics.
When Roth’s group first solved the X-ray crystal structure of LSD bound to a 5-HT2A receptor in 2020, they furthered molecular insights into a phenomenon called “biased agonism” – describing the presumed intracellular mechanism in which only certain cell signalling pathways become activated depending on the way a ligand is bound to a receptor. Biased agonism, and the recruitment of certain proteins upon complex formation, might explain the neuropsychological differences between hallucinogenic and non-hallucinogenic 5-HT2A receptor agonists, through the selective activation of distinct signalling pathways. Building on this progress, another landmark paper published last month demonstrated key mechanisms associated with the antidepressant effects of a non-psychoactive derivative of LSD (2-bromo LSD), including its ability to induce neuroplasticity both in vitro and in vivo – effects that were dependent on 5-HT2A receptor activation – lending more credibility to the therapeutic potential of non-hallucinogenic 5-HT2A agonists, or “psychedelics”.
The Wall Street Journal highlighted recent developments and successful financing rounds within the sector, in a statement piece that outlined the unique investment opportunity of next-generation psychedelics. This included Transcend Therapeutics’ recent US $40m raise in January this year to advance the development of methylone, a shorter-duration MDMA derivative, for PTSD. Despite the challenging macroeconomic environment, and the biotech public market downturn more broadly, there were some other significant raises in the last year including the combined capital raise of US $100m by Gilgamesh Pharmaceuticals and
Lusaris Therapeutics – two next-generation psychedelic companies developing short-acting treatments for depressive disorders and other neuropsychiatric diseases.
A view of the public market downfall.
While these next-generation biotechs have mostly opted for developing candidates with improved selectivity via rational drug design, some are taking a poly-pharmacological approach with a focus on employing multiple drugs on distinct targets of the same receptor network. One example of this is the combination of ketamine and rapamycin that is currently being explored by Freedom Biosciences for Major Depression.
Aside from their potential to improve cost-effectiveness and facilitate implementation into healthcare systems, another key value driver of next-generation compounds is the potential for IP creation. With the psychedelic drug development sector becoming increasingly saturated, competitors are differentiating themselves by leveraging the power of IP and Composition of Matter patents associated with novel psychedelic molecular structures or formulations. These next-generation psychedelic therapies are predominantly in early stages of development – and to highlight their increased interest, they make up over 54% of all “psychedelic” assets (for-profit companies) in preclinical or discovery stages of development, with a handful in ongoing Phase 1 studies. While these compounds have not yet shown their full promise in larger, late-stage clinical trials, next-generation psychedelic drug developers hope to make themselves appealing to traditional, big-cap pharmaceutical companies who are quickly approaching patent cliffs and very interested, though wary, regarding this sector. Collaboration between “Big Pharma” and psychedelic companies has already happened, such as the deal struck last year between Mindset Pharma and Otsuka Pharmaceutical’s McQuade Center for Strategic Research and Development (MSRD), to advance the former’s novel psychedelic compounds through Phase 1a and 1b clinical trials.
Landscape of active or completed “psychedelic” interventional trials by phase (for-profit companies)*
There is now some evidence to suggest that shorter-duration psychedelic treatments are effective for treating mental health disorders. In January this year, Small Pharma announced that their Phase 2a study for Major Depression met its primary endpoint, showing a statistically significant reduction in depressive symptoms following a dose of IV DMT (SPL026) with supportive therapy, compared to placebo. Though DMT is considered a “first-generation” psychedelic, SPL026 demonstrated rapid onset antidepressant effects, favorable safety profile, and high tolerability with an overall treatment time of ~1.75-2.5 hr. In addition, positive six-month data from the study released just last week show that among the patients who had achieved remission within three months with SPL026, 64% sustained remission to six months. These findings may support the long-lasting benefits and improved clinical utility of next-generation psychedelics by virtue of a less resource-intensive treatment paradigm compared to longer-duration psychedelics.
With more and more next-generation companies on the cusp of initiating Phase 1 and 2 clinical trials for these compounds this year, it will be interesting to see how they navigate the macroeconomic climate given the intrinsic dynamism of the psychedelics industry. We’ve already seen companies adopt unique cash management strategies, such as by spinning out assets into entirely new companies (e.g. Algernon Neuroscience from Algernon pharmaceuticals), or by R&D portfolio optimization and compression. At the same time, it’s important to recognise other CNS-focused biotechs, such as Sage Therapeutics and Alto Neuroscience – entities not considered to be “psychedelic” companies – who are operating across the same disease areas as next-generation psychedelic biotechs. While psychedelics move from agents of stigma to promising CNS therapeutics, it begs the question: Is the psychedelic drug development sector really just a subset of the broader neuro-biotech industry?
Though the spotlight is still largely on late-stage organizations such as MAPS – who recently announced positive long-term observational follow-up data from its Phase 3 program – it’s clear that next-generation drug developers are keen to disrupt the psychedelic sector this year.
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