There are currently over 50 publicly traded psychedelics companies.
However, progress in the life science sector often unfolds at a measured pace, especially compared to rapidly advancing sectors like tech. Companies in the space must work within an intricate regulatory landscape and stringent approval process.
In a comprehensive wrap-up, the Investing News Network provides an overview of the most significant and impactful news events from the first half of 2024.
Focus on FDA intensifies
MAPS PBC's new drug application for an MDMA-assisted therapy for PTSD received much attention in H1. MAPS PBC, a subsidiary of MAPS, submitted its application to the US Food and Drug Administration (FDA) in December 2023 following results from several promising clinical trials and years of research into MDMA-assisted therapy for PTSD.
Shortly after the application was submitted, MAPS PBC rebranded as Lykos Therapeutics and raised US$100 million in Series A financing.
In February, the company's new drug application was accepted and granted priority review by the FDA, with a decision timeline set for August 2024. Lykos announced the completion of its European Phase 2 study for the same treatment on April 24.
Psychedelics sector momentum persisted in March, with the FDA granting breakthrough therapy designation to MindMed's MM120, tartrate salt form of lysergide, for treating GAD; and Cybin's CYB003, a psilocybin analog to be used as an adjunct therapy for MDD. Both companies have reported positive meetings with regulators. Within days of receiving its designation, Cybin had met with regulators to design a Phase 3 program, and MindMed reported a “constructive” meeting with the FDA on June 20. Phase 3 studies for both companies are set to begin in H2 2024.
The market had mixed reactions to news of the FDA’s decisions. While MindMed saw a 23.67 percent increase in its share price on March 7 when the company received its designation, Cybin’s share price dropped 13 percent on March 13 when it was granted the same recognition. Cybin also announced a proposed private placement on March 13, which earned it US$150 million.
On May 6, Lykos said the FDA would hold an advisory committee meeting regarding the investigational use of MDMA-assisted therapy on June 4. A public hearing session took place on this day, providing an opportunity for "interested parties" to share pertinent information that could impact the decision-making process. The session's primary objective was to address two pivotal questions:
- Does the available data show that the drug is effective in patients with post-traumatic stress disorder?
- Do the benefits of midomafetamine, with the FDA’s proposed risk evaluation and mitigation strategy (REMS), outweigh its risks for the treatment of patients with PTSD?
After examining all the evidence, the panel acknowledged factors that complicated data interpretation. They noted that it was nearly impossible for participants and staff to remain fully blinded to the treatment. Panelists also remarked that it was difficult to judge the extent to which psychotherapy, rather than the drug, contributed to the reported decrease in symptoms of PTSD.
Furthermore, they expressed concerns about the drug's safety, citing insufficient data on its potential for abuse.
When taken to a vote, the majority of panel members did not agree that the data showed the treatment was effective, or that the risks outweighed the proposed benefits.
While a final decision is not due until August 11, it is unlikely that the FDA will go against the findings of the advisory committee and approve the drug. After the meeting, Lykos CEO Amy Emerson said, "We remain committed to working with the FDA to address outstanding questions so that we may find a path forward to ensure the responsible and careful introduction of MDMA-assisted therapy into the healthcare system, if approved.”
Although Lykos is privately traded, the news reverberated throughout the psychedelics sector.
Many of the most recognized publicly traded companies in the psychedelics sector, including MindMed, Cybin, Compass Pathways, ATAI Life Sciences and Numinus, all saw share price decline after the news broke.
How are psychedelics stocks performing?
Following a period of highly anticipated clinical trials and FDA decisions that dominated the first half of 2024, it's crucial to examine the financial performance of leading psychedelics companies as the industry continues to evolve and garner attention.
As clinical trials can span several years, the progress and financial health of companies are essential indicators of potential growth areas and future prospects in the sector.
Atai Life Sciences, which is in the early stages of testing five new psychedelics-based treatments, released its Q4 and full-year 2023 financial results on March 28, reporting US$40.2 million in net losses for the full year, a significant decrease from the US$152.4 million net loss from the same period a year prior.
On May 15, the company's Q1 results were disclosed, revealing a continued reduction in losses; Atai Life Sciences reported US$26.7 million in net losses compared to US$33.1 million during the same period a year before.
Compass Pathways’ Q4 2023 financial results were released on February 29. They show that its spending on research and development (R&D) increased by 25.4 percent in 2023 compared to 2022, which may have contributed to higher net losses for both the quarter and full year.
However, the company has announced multiple research collaboration agreements in 2024 in anticipation of future FDA approval of its COMP360 psilocybin treatment, including with Greenbrook TMS, Hackensack Meridian Health, Journey Clinical and Mindful Health Solutions. In its Q1 financial report, released on May 8, the company said it anticipates Phase 3 results for two clinical trials of its psilocybin formulation, COMP360, by Q4 2024 and mid-2025, respectively.
Cybin’s has reached notable milestones in 2024. On January 23, the company was granted FDA clearance to initiate a Phase 2a study of CYB004, a deuterated DMT molecule for treating GAD. In February, the company’s Q3 2023 quarterly earnings report included several optimistic updates on the various stages of its other trials.
Cybin has been actively pursuing intellectual property protection for its drug discovery platform, and its Q4 2024 report mentions four additional patents in jurisdictions in the US, Canada and China for CYB003 and CYB004.
MindMed has also made significant progress this year in terms of clinical programs and financial positioning. Its 2023 financial report includes multiple planned milestones, such as presenting 12-week Phase 2b data for its GAD treatment, MM120, and initiating a Phase 3 program in the second half of 2024.
Additionally, MindMed proposed an underwritten offering of common shares and a concurrent private placement, a higher cash balance in Q1 compared to Q4 2023 and decided to consolidate trading of its common shares on the NEO Exchange and Nasdaq, resulting in a voluntary delisting from Cboe Canada on April 1. MindMed's inclusion in the Russell 2000 and Russell 3000 Indexes on June 28 suggests its prominence in the US market could grow in Q3.
Finally, Numinus’ results for its first fiscal quarter of 2024 show an 18.8 percent increase in gross profits and a 3 percent decline in revenue compared to the previous quarter, a reduced cash burn rate of under US$1 million per month from October 2023 and over 700 new learners enrolled in its training programs.
The company was also approved to conduct a clinical trial by Health Canada that will assess the viability of a group model in MDMA-assisted psychotherapy on May 30.
On June 20, the company announced its intention to change its name to "Numinus Intelligence" after acquiring MedBright AI, a company that uses artificial intelligence to help medical professionals improve healthcare access and patient outcomes and reduce costs.
The acquisition involves merging MedBright's AI-powered clinical solutions with Numinus' data to optimize clinical operations and take advantage of reimbursable services.
What's ahead for the psychedelics sector?
The future of psychedelics and mental health treatment is evolving, and shareholders of companies pursuing psychedelics-based treatments will continue to advocate for their potential to play a considerable role in the future of mental health.
However, continued legislative action is necessary for psychedelics to become a more integrated part of mental health treatment, and to allow broader access and research. Currently, there are legislative developments happening in a few states.
In November, Massachusetts residents will have the opportunity to vote on a measure that would legalize the use of psychedelics in the state. The announcement was made by state officials after Massachusetts for Mental Health Options submitted 14,000 signatures to the office of Commonwealth Secretary William F. Galvin, who finalized the ballot questions on July 25.
In California, Senator Scott Wiener (D-CA) and State Assemblymember Marie Waldron (R-CA) introduced bipartisan legislation in February after Democratic Governor Gavin Newsom vetoed legislation that would have decriminalized psychedelic mushrooms last year. The new law would allow patients to consume psilocybin, dimethyltryptamine (DMT), MDMA and mescaline under the supervision of a licensed therapist.
The bill was approved by the Senate Business, Professions and Economic Development Committee on April 16, and by the Senate Public Safety Committee on April 23. However, on May 16, the Senate Appropriations Committee voted to hold the bill without taking further action, putting its future in question.
In New York, Assembly Bill 0375 was introduced on May 21. The bill is sponsored by Assemblymember Amy Paulin (D-NY), and is supported by New Yorkers for Mental Health Alternatives. It proposes the legal growth, cultivation and regulated adult use of psilocybin for certain health conditions. The bill has been referred to the Assembly Health Committee.
In Utah, SB 0266, a bipartisan bill sponsored by Senator Kirk Cullimore (D-UT) and Assemblymember Jim Dunnigan (R-UT) outlines a pilot program for hospitals to administer psilocybin and MDMA as an alternative treatment option for adults 18 and older. The bill became a law on March 21, although without Republican Governor Spencer Cox’s signature.
The financial health and progress of leading psychedelics companies indicate potential growth areas and future prospects in the sector.
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Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
