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Inside the race to make psychedelics ‘mainstream medicines’

When Berra Yazar-Klosinski was wrapping up her PhD in molecular cell and developmental biology at UC Santa Cruz, there was an unassuming little office…



When Berra Yazar-Klosinski was wrapping up her PhD in molecular cell and developmental biology at UC Santa Cruz, there was an unassuming little office right down the road, hidden inside a bungalow-style house with a postage-square lawn.

Berra Yazar-Klosinski

Tucked away on a busy street, the building didn’t strike Yazar-Klosinski as the type of place where scientific research would occur. But inside, she would learn, was the Multidisciplinary Association for Psychedelic Studies (MAPS), a nonprofit working on turning psychedelics into medicines for a host of mental illnesses.

Yazar-Klosinski knew nothing about them — or about the psychedelics field, for that matter. She focused on neurobiology in her undergrad days at Stanford and had a gig helping Millennium Pharmaceuticals with Phase I trials for acute myeloid leukemia. But she knew she wanted to land at a nonprofit after grad school. So when she spotted a data entry opening at MAPS on Craigslist, she threw her hat in the ring.

Then she saw the data.

One of Yazar-Klosinski’s first projects was studying the difference between MDMA and placebo in treating patients with post-traumatic stress disorder. And though it was a small trial, researchers found that MDMA was significantly better at reducing PTSD symptoms on a commonly used symptom scale, with results that were durable over an average of three and a half years.

“I have a very quantitative mind, I would say, and so just seeing the numbers, it was amazing, even in the very early studies,” she said. “People would go from a PTSD severity score of like 80 down to zero, on occasion. It was rare, but sometimes you could see it.”

Recent human data have revived a once-forgotten field looking to use modified psychedelics to rewire the brain in search of new and better therapies for mental health. In what was once a marginalized — and in some cases criminalized — research space, new companies are luring investors and inspiring a new way of thought around mental health treatment.

J&J helped drive that work a few years ago with a pioneering and highly controversial approval for esketamine in treatment-resistant depression. And though investors were slow at first to hop on board, psychedelics companies have rolled in an increasingly large amount of VC cash over the last couple of years.

Chris Dokomajilar at DealForma has tracked $538 million in venture investments into companies focused on psychedelics since 2017, with a majority coming in 2020 and 2021. And that doesn’t count another $672 million in public offerings.

While President Richard Nixon’s “War on Drugs” essentially ground psychedelic research to a halt in the 1970s, some say a “renaissance” is underway. The first batches of in-human data suggest the drug class is effective, with Jefferies analysts speculating back in September that the therapies have a “fair chance of producing profound/differentiated effects vs existing therapies.”

There’s just one question that remains, a big one when thinking about drugs that are administered and bring side effects like no other FDA-approved medicines in history: How do you make them practical?

How a Sandoz chemist became the ‘father of LSD’

Although most psychedelic biotechs are less than a decade old, the modern history of these hallucinogens has been closely tied with pharma.

A Sandoz chemist named Albert Hofmann first extracted LSD from a fungus that grows in rye kernels back in 1938, and the Swiss pharma soon produced it for psychiatric research. They added psilocybin in 1960 after Hofmann extracted it from magic mushrooms in 1958, the same year psychiatrist Humphry Osmond coined the term “psychedelic” from the Greek words psyche (mind or soul) and deloun (show).

Although Hofmann started by accidentally — and then very intentionally — dosing himself, psychiatrists were soon testing psychedelics widely for a suite of mental illnesses. Tens of thousands of patients are estimated to have been treated with psychedelic psychotherapy over roughly 15 years.

Ekaterina Malievskaia

In those early days, when the current regulatory approval system had not yet been adopted, the rules around testing new drugs were significantly more lenient, said Ekaterina Malievskaia, chief innovation officer and co-founder of Compass Pathways, which started developing psilocybin again in the 2010s.

“The pharmaceutical company was just able to send it to clinicians and say, ‘Hey, we have an interesting drug. Why don’t you try it on your patients and let us know what happens?’” she said. “So that’s where a lot of anecdotal evidence was created.”

However, that anecdotal evidence never amounted to an approval — and after an explosion of scientific study (and recreational use) in the 1950s and 1960s, research slowed to a near stop when Nixon declared the national “War on Drugs.” The president signed the Controlled Substances Act in 1970, putting most psychedelics under Schedule 1 and prohibiting their use.

New research began to surface again in the early- to mid-1990s, according to Matthew Johnson, a Johns Hopkins professor who’s been studying psychedelics since 2004. And by the 2010s, a so-called “psychedelic renaissance” began to form, driven by studies from a handful of academics and decades of work from MAPS. Companies such as Compass were suddenly able to raise millions in venture capital and a couple of states began decriminalizing — or even legalizing — psychedelic-assisted therapy.

In tandem, the number of clinical trials involving psychedelics skyrocketed. According to a report in Nature, there were 17 trials involving psychedelics in 2020 — a majority of them around psilocybin — compared to just three in 2010.

The FDA has shown it’s open to considering the benefits of psychedelic therapies, granting multiple breakthrough designations to psilocybin-based treatments, including Compass’ back in 2018. And in 2019 it approved J&J’s Spravato, or esketamine, for treatment-resistant depression, later expanding the label to major depressive disorder in adults with acute suicidal ideation or behavior.

Spravato is not a traditional psychedelic because it doesn’t act on the same serotonin receptors as LSD or psilocybin, but it can have dissociative effects such as hallucination. And its rocky rollout pointed to some of the hurdles any of the classic psychedelics will have to clear if the FDA approved.

How practical are they?

Spravato quickly found itself at the center of controversy. Part of the debate centered over its efficacy: J&J said the drug helped 41% and 43% of patients achieve clinical remission of depression, with some experiencing symptom reduction within 24 hours — a critical benefit proponents pointed to.

Theresa Nguyen

“Traditional oral antidepressants need weeks or more to take effect,” Theresa Nguyen, chief program officer at Mental Health America, said at the time, making Spravato “life-changing.”

Others, including former FDA reviewer Erick Turner, noted the drug failed in patients 65 and older, a crucial depression demographic, among a long list of questions.

But the simple fact was that, regardless of its exact efficacy, many of the patients in most need were not getting it. Although former President Donald Trump publicly promoted the drug and officials reportedly pushed the VA to buy “truckloads,” the VA only gave it to around 15 veterans in the first 10 months post-approval.

The reason? The same hallucinogenic effects that might drive the drug’s efficacy. The agency limited its use to VA clinics that had experience with ketamine, the recreational drug that had already been used off-label for depression for years, and thus “existing facility expertise.” Patients had to be given the drug under a physician’s supervision and monitored for at least two hours, “because of the risk of sedation and dissociation,” as the FDA explained.

Classic psychedelics, like psilocybin, can trigger longer trips, and thus pose greater challenges. Compass is one of the oldest players in the field, with a psilocybin treatment that recently completed a Phase IIb study for treatment-resistant depression that showed positive results, albeit with some caveats. But for Malievskaia, one of the main challenges left unsolved is how best to support patients while they are experiencing a trip.

“The challenge I see is not so much in the drug, but in how to support patients in this experience,” she said.

Inside the psych experience

Across the field, the psychedelic therapy process typically goes something like this: After in-depth screening, patients arrive at a hospital or care center for treatment, where they’re given the drug along with some eyeshades, and in some cases a specially designed soundtrack. A therapist or counselor is there for support during the experience if need be, but in most cases, minimal intervention is needed.

Robert Barrow

The eyeshades and music help encourage introspection, according to Johnson. Counselors want patients to focus within, rather than, for example, the enhanced colors they might see on the wall. Some patients report feeling a sense of “oneness with the universe,” he explained, while others might think about their past or tie the experience to religion. They can also experience anxiety ranging “from mild to, like, terrifying,” he added — but that’s what the counselor is there for.

While the experience can be challenging for patients, as it is akin to an intensive psychotherapy, there are always protocols in place in the event that someone has an acute or severe anxiety reaction, said Robert Barrow, CEO of MindMed. His New York-based psychedelics company was the second to ever go public on an American exchange, behind Compass.

The procedure doesn’t require an overnight stay, though patients typically stay for hours while they are receiving the therapy. For psilocybin, it’s usually about six hours, including five hours in which they’re experiencing the drug’s effect, Johnson said.

Then they return afterward to discuss their experience and insights they may have gained. It all amounts to a far more intensive, expensive and time-consuming process than any company developing a new anti-depressant pill — or any patient being prescribed one — will have to consider.

“It is not just the drug the patients come and take and have a good time. It is a therapeutic process,” Malievskaia said, adding that patients also meet with a therapist a couple of times before the session.

As it pushes psilocybin into a final Phase III trial for depression and mid-stage trials for other conditions, Compass is also investing in refining the therapeutic experience, should they get approval. Malievskaia envisions a data-driven approach that might include, for example, prompts for therapists to refer to.

“We’re using natural language processing, we’re using machine learning to understand human experience and to understand what works, what doesn’t in therapy,” she added.

Don’t change the facility, change the trip

Other companies are trying to make psychedelics easier to scale by changing — or even doing away with — the trip.

There’s an ongoing debate on just how long a trip should last. Is a shorter, more intense experience better than a prolonged but less intense one? The folks at Eleusis are strong believers in the former, and they’re heading into Phase I to prove it. Rather than hanging around a treatment site for six hours, Eleusis thinks patients taking its so-called ELE-Psilo treatment could potentially be in and out of the treatment center in two hours.

Shlomi Raz

“This needs to be more like a dentist appointment than a surgery, right?” CEO Shlomi Raz said. “That’s the fundamental kind of cost effectiveness threshold that I think that clinicians, patients, payers, investors, everyone’s looking for.”

Raz left a career at Goldman Sachs back in 2008 to pursue a lifelong interest in psychology. It was upon enrolling at New York University that he stumbled upon a paper out of Johns Hopkins about the therapeutic use of psilocybin. It inspired him to launch Eleusis in 2013 with the goal of “transform[ing] psychedelics into mainstream medicines.”

The company recruited Eli Lilly neuroscience veteran Rob Conley as VP of R&D, and quickly promoted him to senior VP before announcing plans back in January to go public in a SPAC merger. It conducted two LSD trials in 2015 and 2016, and now has a psilocybin candidate in Phase I for major depressive disorder.

“The depression indication is an important and a good one, but it really is a tip of the iceberg,” Conley said. “There’s other psychiatric modalities, and potentially even medical things, inflammatory conditions, neurodegeneration, where this stuff might be important.”

Rob Conley

What sets ELE-Psilo apart from the pack? It’s formulated for IV delivery, as opposed to rivals going for oral or intranasal delivery. Delivering orally, he says, prolongs the drug effect. But with IV delivery, you get more consistent absorption levels, enabling control over intensity and duration.

“That’s really our approach to addressing what we think is one of the greatest challenges here, making this drug therapy practical,” Raz said.

Johnson, on the other hand, thinks there may not be just one answer to the short versus long debate. Or the IV versus oral debate. And he won’t be satisfied until he sees more data.

“That answer could be different not only across different disorders, but different individuals,” he said. “We need data on all of this, but it should all be explored.”

Johnson recently published a paper examining the effects of two different soundtracks played during therapeutic sessions, one with classical music, and another with alternative music. And while durability appears to vary from person to person, more data will be required to determine the best dosing methods, he added.

“For some people, one session, it really seems like, ‘Wow!’ That helps with their depression or their addiction, and that’s kind of all they needed, and that’s great,” he said. But others might benefit from multiple doses, or booster doses, and that will all play out in the next batches of data.

Other scientists are looking to curb hallucinogenic effects altogether — including the team at Delix, which raked in a $70 million Series A round in September to fuel their search for therapeutic “psychoplastogens,” or small molecules that produce rapid and long-lasting psychedelic- and ketamine-like effects on neuronal structure.

The science stems from David Olson’s lab at UC Davis. These non-hallucinogenic molecules produced “sustained therapeutic effects” in preclinical models, according to Delix, and their first two candidates are likely to enter the clinic in the second half of this year.

Kurt Rasmussen

“Basically what we’re doing is taking compounds that are psychedelics and modifying them, so that we believe they retain the efficacy that is the beneficial effects like antidepressant effects and anti-anxiety effects, but no longer produce the hallucinations,” CSO Kurt Rasmussen explained.

These companies represent just a handful of the players in the race to bring psychedelic medicines to the FDA. DealForma notes 39 active companies in the space, not including another five that were recently acquired.

“We’re still scratching the surface, by the way, about what’s underneath the scientific benefits of psychedelics across the board with psilocybin, MDMA, LSD, mescaline, Ibogaine, etc.,” said Bob Dagher, CMO of Naples, FL-based Enveric Biosciences, which is developing a “psybrary,” a library of hundreds of psychedelic-inspired molecules.

If companies can figure out a scalable method, patients will come, Barrow said. The enthusiasm they saw for clinical trials showed that.

“There are not challenges in the interest and availability of patients,” he said. “You have a lot of folks who are proactively reaching out trying to get in studies, but they’ll have conditions that make them not appropriate for the study or they’ll be excluded from the study.”

Battling a stigma

Florian Brand

For psychedelics to enter widespread use, researchers and companies will also have to change a larger public narrative. Despite the current boom, Florian Brand, CEO of Peter Thiel-backed atai, says it was initially hard to raise money because of the stigma that exists around psychedelics.

“We did have to educate a lot of people,” he said. “Mental health in itself is stigmatized. Psychedelics as a potential catalyst for innovation for mental health disorders is also stigmatized.”

Some critics argue that the class of drugs carries the potential for abuse. And while Spravato’s label does include a boxed warning for abuse and misuse, Malievskaia says there is no evidence that psilocybin causes physical dependence.

“That said, anything can be abused, obviously. Anything legal or illegal can be misused or abused. So there’s always a potential, but it doesn’t lead to physical dependency in the way opioids, for example, do,” she said.

LSD is also not considered an addictive drug. In fact, some scientists believe that psychedelics like psilocybin could be used to treat other addictions, such as smoking or alcoholism. Johns Hopkins released a study back in 2014 showing that 15 longtime smokers who took psilocybin achieved an 80% abstinence rate over six months, compared to a 35% rate seen in patients taking the widely used smoking cessation drug varenicline.

Canadian biotech Entheon Biomedical is in the midst of a Phase I/IIa trial testing DMT, a hallucinogenic drug with a much shorter effect, for nicotine addiction. Unlike psilocybin, DMT’s effect lasts no more than a few minutes, allowing for a 30- to 60-minute procedure. And atai subsidiary DemeRx is studying the use of ibogaine, another Schedule I psychedelic, for the treatment of opioid use disorder.

“I wish these things weren’t even called psychedelics,” Conley, the Eleusis exec, said. “I mean, I recognize they are. But you know, I think a lot of times in medicine, we tend to forget that there have been a natural basis and a human use of a lot of agents we use before we did them.”

What comes next?

There are still much more data to be seen — on durability, dosing size and even best counseling strategies — before the FDA is likely to make any decisions in this space.

“I think it’s premature, personally, to really get all hyped up about it. We really need FDA to make the determination about safety and efficacy, which has not been done yet,” said Yazar-Klosinski, who’s now CSO of the MAPS Public Benefit Corporation. “We hope to have that kind of news in the next year or two.”

Some have falsely compared the field to the “next cannabis,” Brand said, dispelling the connection: “It’s really not. It’s really a biotech approach.”

Looking ahead, Yazar-Klosinski said the field could benefit from more collaboration, as many players are working on different variations of the same drug. To help boost progress, MAPS posts resources on its website like its MDMA investigators’ brochure, which covers clinical, nonclinical and manufacturing research updates from its own MAPS-sponsored programs.

“I think that other companies could do the same,” she said. “That will make it a little bit easier to figure out what’s going to happen with all of these multiple people working on the same drug.”

Above all, Barrow of MindMed emphasized, the field needs to avoid another freeze-out period like the 1970s when research ground to a halt for more than a decade.

More data will likely help with that, even if it won’t answer every lingering question overnight. MAPS read out promising Phase III results for its MDMA-assisted therapy in 90 PTSD patients back in May, and it’s also studying the effects of MDMA in other conditions like eating disorders and social anxiety in autistic adults. The organization has since moved from the bungalow-style house to a strip mall in San Jose.

“​​I think it’s critically important that we remember that history and don’t repeat it,” Barrow said. “I firmly believe we’d have a lot better mental health outcomes and a lot better substance abuse statistics if we had these treatments available for the last five decades.”

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