The psychedelic industry learned important lessons when a Food and Drug Administration advisory committee voted to reject a landmark MDMA-based therapy designed to treat PTSD.
The rejection shook investors and demonstrates that FDA approval for novel psychedelic drugs is further away than previously thought, but industry insiders remain confident in the industry’s long-term success.
The Psychopharmacologic Drugs Advisory Committee voted two to nine on the question of whether Lykos Therapeutics’ MDMA therapy was effective as a post-traumatic stress disorder treatment and one to 10 on the question of whether the benefits of the therapy outweigh the risks.
“We are disappointed by the result of the FDA advisory committee’s vote,” Daniel Love, co-founder and partner of psychedelic-focused venture studio Beckley Waves, told Behavioral Health Business in an email. “The committee vote demonstrates that the historic stigma attached to psychedelics continues to slow down the process of making these treatments available to patients, especially veterans and first responders, who need them.”
Beckley Waves co-founds and partners with early-stage psychedelic companies that provide new psychedelic medicines or mental health solutions. The firm acquired digital ketamine-assisted therapy (KAT) provider Nue Life in October 2023.
The rejection is likely a “speed bump, not a stop sign” for the psychedelic industry, Allen Bromberger, founding partner of Bromberger Law, told BHB in an email.
“It will dampen expectations among investors,” Bromberger said. “Maybe that’s a good thing since the goal is to have these therapies made available on an affordable basis based on actual need, not commercial opportunity or to chase profits. [Lykos] is owned by a nonprofit, so that may help, but there is a danger.”
Bromberger Law specializes in social enterprise, representing entrepreneurs, charities, private foundations and other groups.
No drug has been approved for PTSD in 20 years, making MDMA especially compelling, according to Lt. Gen. Martin Steele, co-founder of Reason for Hope and founder and president of the Veteran Mental Health Leadership Coalition.
“Considering the clear limitations of currently available medications such as SSRIs and talk therapies, MDMA-AT offers a seemingly obvious and logical approach to treating PTSD,” Steele said. “The drug’s ability to rapidly establish therapeutic rapport and reduce fear response makes it easier to commit to and engage in a psychotherapeutic process that involves confronting often highly traumatic memories.”
Reason for Hope is a nonprofit policy and advocacy organization that seeks to advance access to psychedelic therapies.
The Veteran Mental Health Leadership Coalition is a national veterans’ organization under Reason for Hope that works to increase access to psychedelic therapies for veterans.
Veterans are slightly more likely to experience PTSD than civilian populations, according to the U.S. Department of Veterans Affairs. Female veterans are almost twice as likely to experience PTSD compared to male veterans.
The panel’s decision granted the psychedelic industry important insights on how regulatory councils view psychedelic compounds, Love said. He maintains “every confidence” that psychedelic drug development companies will succeed at bringing novel treatments to market.
While the industry is predicted to weather the storm of the panel’s decision, the move did create seismic waves in the stock market.
Following the panel’s decision, shares for psychedelic companies spiraled downward, demonstrating a strong hit to investor confidence.
“The immediate market reaction reflects investors seeing an additional risk, but this does not diminish the long-term potential of psychedelics in behavioral health,” Love said. “Just as an example, there are now [over] 200 clinical studies underway … across more than 70 universities and now hundreds of related companies. All that progress is hard to stop entirely.”
One of the challenges associated with Lykos’s pursuit of FDA approval is the proposed treatment pathway, which involves three medication sessions combined with psychotherapy before dosing and integration sessions afterward.
“This new class of treatment is incredibly promising, as evidenced by the data collected so far, but it also presents challenges for an agency such as the FDA to evaluate because of the acute subjective experience and combination with psychotherapy, which we believe is an important component of safe, supported, and effective treatment,” Love said.
Other psychedelic companies can learn from Lykos’s struggles and may benefit from outsourcing psychotherapeutic support to third-party providers instead of offering it themselves, Love said.
The panel serves as an advisory board to the FDA and does not necessarily mean the FDA will reject the drug when it makes its final decision.
The FDA has previously approved drugs despite rejection by its advisory committee.
A federal panel rejected Alzheimer’s drug aducanumab, made by Biogen, in 2020. Despite the panel’s decision, the FDA approved the drug using the accelerated approval pathway in 2021.
The FDA’s approval was highly contested and resulted in the resignations of three advisory committee members.
Biogen announced that it would discontinue the development and commercialization of aducanumab in January 2024.
Despite the backlash following aducanumab’s approval, there is still hope for the FDA to accept Lykos’s drug.
“Lykos’ compelling work to advance safe and effective MDMA-assisted therapy represents a rare glimmer of hope for those patients in need,” Love said. “That is why we hope a sensible path forward can still be worked out between the FDA and Lykos.”
Even if the FDA does approve the drug, MDMA is still many leagues away from widespread use, Steele said.
“The unfortunate reality is that even with FDA approval, we are many years away from this resource-intensive treatment ever reaching a significant number of people, so there is ample time for additional real-world safety data collection before any notable public health impact,” Steele said.
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