From LSD to healing minds: Where are we standing in psychedelic drug development?

psychedelic drug development

Once stigmatized, mental health conditions like anxiety, depression, schizophrenia, and post-traumatic stress disorder are now gaining recognition in society thanks to years of research that have enabled us to identify and label these disorders. Similarly, psychedelic substances have long been shrouded in taboo. However, with increasing investment in psychedelic drug development, it seems we’re gradually breaking down the barriers surrounding both mental illness and psychedelics. But how exactly has this field progressed to become more financially viable, and where do we currently stand in this domain?

Table of contents

    What is a psychedelic?

    Psychedelics are sometimes referred to as hallucinogens, however, we will stay away from this appellation as we will see that the hallucinating effect is no longer the chore of psychedelic drug research. Solomon H. Snyder, former professor of neuroscience, pharmacology, and psychiatry at the Johns Hopkins University School of Medicine defined psychedelics as “a broad class of drugs defined by their ability to induce an altered state of consciousness.”

    Historically, one name comes to mind when talking about psychedelics: LSD (lysergic acid diethylamide). Since its discovery in the 1930s and the identification of its psychedelic effect in 1943 by Sandoz laboratories, LSD has been designated as a narcotic by the World Health Organization (WHO) in 1966. It is now under clinical trial for psychedelic-assisted therapy from the company MindMed.

    Currently, the most advanced research revolves around psilocybin, the psychoactive ingredient found in what we call “magic mushrooms”, and MDMA,  a synthetic drug that acts as a stimulant and hallucinogen. But how has the field of psychedelic drug development evolved to become the hope it represents today in mental illness treatment?

    From an enthusiasts-only venture to a science-backed endeavor

    Joseph Tucker, chief executive officer (CEO) of Enveric Biosciences, a company dedicated to the development of neuroplastogenic small-molecule therapeutics, a new class of fast-acting therapeutics capable of rapidly promoting structural and functional neural plasticity, for the treatment of neuropsychiatric disorders, described the beginnings of the field as embraced by enthusiasts who themselves had recreational experience with psychedelics before. “The initial response to this sector from the biotech industry was highly conservative. On the one hand, you had this set of enthusiasts wanting to explore the potential of psychedelics against mental illness, and on the other, the industry standing its ground because we had stayed away from this substance for so long for a good reason,” said Tucker.

    At the beginning of the field, the pitches of the companies launching psychedelic-related ventures were based on personal experiences: “The stories behind the first psychedelic companies weren’t backed by drug development experience. You’d hear the CEO say ‘this saved my life’ or any other personal connection to psychedelics but the necessary research wasn’t there to make the venture successful in the long run,” Tucker added. 

    However, this has changed in the last couple of years, as academics who might also have fallen into this category of enthusiasts started to get into this taboo area. Progressively, it became a matter of finding out why psychedelics could change lives and trying to understand the mechanisms behind them. “The narrative has changed from ‘I saw purple dinosaurs’ to scientists pointing out that there is no reason for it to be hallucinogenic to work,” Tucker said. At this point, it is all about isolating what works in psychedelics and how to suppress the dangerous effects.

    The three-step evolution of the psychedelic drug development sector

    We reached out to Janet Qi, CEO of PurMinds NeuroPharma, a company with three psychedelics in its pipeline including a non-hallucinogenic neuroplastogen, to break down the field’s evolution over the years. According to her, the sector has already been through two stages of evolution and is currently in the third phase.

    “Both first and second phases of the drug development mostly focused on psychiatric conditions, and work by inducing hallucination, or ‘trip’, for the brain to rewire, resulting in therapeutic effects. During these phases, the big pharma stayed on the sideline.”

    Janet Qi, CEO of PurMinds NeuroPharma

    According to Qi, the first phase was when companies such as Compass Pathways and MAPS, now Lykos Therapeutics, were using generic psychedelics, or some variations of the generic psychedelic molecules for psychiatric conditions, such as treatment-resistant depression. “Due to a lack of intellectual property (IP) protection, these companies usually relied on result data exclusivity instead of the quality of the candidate itself to recoup their investment,” explained Qi.

    Qi describes the second phase as when companies such as Cybin were using deuterated psychedelic molecules, the result of the selective replacement of protium hydrogen isotope atoms in small-molecule drugs with deuterium hydrogen isotope atoms altering the properties of the initial molecule. These second-generation molecules may have better pharmacological profiles, such as shorter trip time, hence reduced costs for each treatment session, and have some level of IP protection as they constitute novel candidates.

    Indeed the big pharma companies were waiting for better molecules to be discovered and address the concerns of high costs, the “trip” side effect, and in the end payers’ reluctance. Now, new compositions of matter are being invented to address the hallucination and side effects. According to Qi, the future of psychedelic medicine resides in newer inventions that can be home-administered, self-dosed drugs with low abuse potential, and hence lower financial and societal costs to the payers.

    Where is this renewed interest coming from?

    The growing interest in psychedelics comes from a combination of factors. Tucker points out that since the 2019 pandemic, more and more people suffer from depression or anxiety. “Not only did the younger generation who have gone through the pandemic develop anxiety or depression, but they are more comfortable talking about it than previous generations, and suddenly it became the zeitgeist and it was in everybody’s mind,” said Tucker. 

    The other factor is the promising results that psychedelic research has shown. Qi attributes this new breath in the field to a blend of breakthroughs and encouraging clinical trial results: “Positive data is behind the renewed interest in psychedelic drug development. The Compass Pathways trial of Psilocybin and Lykos trial with MDMA have both generated very encouraging data. Compass Pathways’ candidate is in phase 3 clinical trials with potential approval by the U.S. FDA in 2025 and Lykos’ MDMA-assisted therapy is under regulatory review.”

    Indeed, Compass Pathways has reported phase 2 safety data from its first clinical trial of psilocybin in treating PTSD, showing that their candidate, COMP360, was well-tolerated with no serious adverse events. This trial is part of broader research into psilocybin’s potential in treating difficult mental health conditions. Efficacy data, focusing on whether the drug improves PTSD symptoms, is expected in the spring following a 12-week monitoring period post-dosing. The trial is being conducted in both the U.S. and the U.K​​.

    On Lykos Therapeutics’s side, the company announced the publication of a study in PLOS ONE, examining the effects of MDMA-assisted therapy on emotional coping skills and self-experience in adults with severe PTSD. The study found significant improvements in self-experience measures for those receiving MDMA-assisted therapy compared to placebo. This research highlights the potential of MDMA-assisted therapy to address complex emotional and self-identity issues related to PTSD, beyond symptom improvement alone. More recently, in February, the company announced the FDA acceptance of its priority review of new drug indications for its MDMA-assisted therapy.

    One breakthrough Qi describes as decisive in the promising result these trials have shown is a better understanding of the pharmacology and neurobiology of classic psychedelics: “What receptors the drug activates, what receptors are primarily responsible for their therapeutic effects, what downstream neural pathways and processes are involved in the therapeutic effects: These are elements we now have answers for and we need to perfect our knowledge.” 

    Tucker and Qi agree that the challenge now lies in developing drugs that lack the hallucinogenic compound, but there already are promising candidates in the pipeline.

    What is in the psychedelic drug pipelines?

    Lykos and Compass Pathways have the most advanced solutions in the sector but they are not alone. After positive results from phase 2a/b, Awakn’s ketamine-assisted therapy for alcohol use disorder is advancing to phase 3. The study achieved its primary and secondary endpoints, including a remarkable 86% abstinence rate over 6 months post-treatment, with no serious adverse events reported. 

    Janssen is also involved in this market with Spravato. The FDA approved Janssen’s Spravato (esketamine) CIII nasal spray, along with an oral antidepressant, to treat adults with major depressive disorder (MDD) experiencing acute suicidal ideation or behavior. The approval is based on phase 3 data demonstrating significant symptom improvement within 24 hours, sustained through four weeks​​. 

    There are over 30 candidates currently in phase 2 clinical trials including solutions from Biomind, Cybin, and Apex Labs to name a few.

    Here are examples of promising candidates currently in clinical trials:

    • SYNP-101 by Ceruvia Lifesciences is a synthetic form of psilocybin being explored for alcohol use disorder and obsessive-compulsive disorder in a phase 2 trial
    • APEX-52 and APEX-90 by Apex Labs, both low-dose psilocybin formulations, are in phase 2b studies targeting depression in veterans with PTSD and depression associated with PTSD, respectively. 
    • GH001 by GH Research, an inhaled formulation of 5-MeO-DMT, is in phase 2 trials for bipolar II disorder and postpartum depression, indicating a potential new delivery method for rapid-acting psychedelics​​.
    • NM-1001 by Nova Mentis, a low-dose psilocybin formulation, is set for a phase 2a trial as a potential treatment for Fragile X Syndrome, highlighting the exploration of psychedelics in genetic disorders​​.
    • BPL-003 by Beckley Psytech, an intranasal synthetic 5-MeO-DMT, is being evaluated in phase 2 for treatment-resistant depression.
    • TRP-8802 by TRYP Therapeutics, an orally-delivered synthetic psilocybin, is set for a phase 2 trial for fibromyalgia, and binge-eating disorder.
    • SLS-002 by Seelos Therapeutics, an intranasal racemic ketamine, is in phase 2 trials for PTSD​​.
    • MindMed’s LSD therapy for MDD has shown positive results in its phase 2 trials.
    • Incannex’s psilocybin-assisted therapy for generalized anxiety disorder is in phase 2 trials.

    How do psychedelic clinical trials differ from traditional trials?

    However, Tucker points out major differences between more traditional clinical trials and trials involving psychedelic drugs that might make it more difficult for psychedelics to be approved. “With the psychedelic drugs that cause hallucinations, there is a requirement for the patient submitting to the trial to take part in psychotherapy sessions before, during, and after taking the treatment, to integrate the use of the drug into daily life to make sense of it. This is a very unique criterion and it also means that once the drug gets approved, the psychotherapy requirement will have to be integrated into the label,” said Tucker.

    The second difference Tucker points out is the very unique nature of the placebo effect in psychedelic drug trials: “Double-blinded phase 3 trials exist to get rid of this placebo effect, to make sure the drug is working thanks to its mechanisms and not because of belief. If the placebo effect works for more tangible diseases like cancer, imagine on illnesses such as anxiety, it makes it very hard to trick the patient and complicates even further clinical trials.”

    Also, when it comes to classic psychedelic drugs that alter the perception of the one taking them, it is even harder to fool someone into believing they could have received either the placebo or the real drug. “To address this challenge, alternatives such as subperceptual doses of the active drug or other drugs that mimic some aspects of the psychedelic e.g., niacin have been used as placebos,” said QI.

    Clinical trials aren’t the only challenge psychedelic drug development is facing.

    What challenges is psychedelic drug development facing?

    Dealing with taboos comes with its set of hurdles. The first that comes to mind is the regulatory aspect of the process. In most parts of the world, these substances are categorized as dangerous with high abuse potential, which they are when in recreational settings. “There is going to be a lot of red tape everywhere and it is going to be a challenge to reschedule psychedelics around the world. Health agencies such as the FDA are very pragmatic and there is going to be a need for very solid proof of it working and of our ability to control the negative effects to advance the field,” Tucker pointed out.

    All the difficulties relevant to clinical trials will also be replicated once the drug is accepted. For instance, Qi wonders how the FDA will reconcile the therapy part of psychedelic-assisted therapy as the FDA does not regulate psychotherapy or the practice of medicine.

    The reimbursement policy approved psychedelic drugs are going to benefit from is also a question mark at this point. This is going to be decisive in the future as some of these substances have been illegally bought and used for a long time. If the reimbursement policy isn’t adequate, it leaves a dangerous potential for self-medication. “The situation we want to avoid is when someone has the choice between an extensively expensive and complicated process or attempting to self-medicate with a great risk of harming themselves,” said Tucker.

    When dealing with such grey areas, investors might get cold feet and companies struggle to find investment. Qi describes it as a chicken and egg problem: “The situation was especially aggravated when many psychedelic companies went public too early during the psychedelic boom of 2020 and 2021. When the market cooled down commencing mid to late 2021, and especially for the psychedelic space when investors were not sure about the business model and big investors and big pharma were on the sidelines, this created a funding drought.

    “Many of the psychedelic companies that raised money, in 2020 and 2021, spent most of it in drug discovery when in reality, each company only needs one or two novel chemical entities (NCEs) to be very good so that you can push them through the drug pipeline.”

    While the field is making strides, there are still a lot of questions that need to be answered to better understand what we are looking at.

    What’s next for psychedelic drug development?

    Tucker believes the ultimate goal is the non-hallucinogenic psychedelic drug. This will take a lot of research still to fully understand the mechanism behind psychedelics. Tucker highlights the importance of understanding the mechanisms regarding psychedelics as the animal models we test on before testing on humans are imperfect. It is much easier to measure the efficacy of a cancer treatment on a mouse than a treatment for PTSD. “If you understand to the fullest how the drug works you no longer need to know if the rat you are testing is actually depressed, you can observe if the receptor in the brain you are aiming for is triggered or not,” Tucker said.

    Qi identifies that the next critical step is determining the right dose, the frequency of treatment, and the right psychotherapy for the right patient. “Although there is still a lot to learn, the data we’ve collected and continue to collect reinforce an optimistic outlook for psychedelics as an efficacious treatment for many neuropsychiatric disorders,” added Qi.

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