Exclusive Interview With Doug Drysdale, CEO of Cybin, On The Future Of DMT

Highlights:

Cybin's R&D strategy:

• Phase 3 Study Timeline: Cybin plans to start its Phase 3 study for psilocybin as a treatment for Major Depressive Disorder (MDD) by the end of Q1 2024, following an end-of-Phase 2 meeting with the FDA.
• Competitive Positioning: Cybin aims to follow closely behind Compass Pathways, which is about six months ahead in its psilocybin Phase 3 program. Cybin plans to offer an "optimized asset."
• Target Market: Cybin is focusing on MDD, identifying a substantial unmet need among patients who are not controlled on SSRIs, rather than targeting Treatment-Resistant Depression (TRD).
• Practical Challenges: Treating TRD patients is more complicated due to their “resistant” nature and instances of suicidal ideation, making MDD a preferable initial market.
• Clinical Innovation: Cybin aspires to provide a paradigm shift in depression treatment, moving beyond incremental improvements over existing therapies like SSRIs.
• Strong Scientific Backing: The company's compounds are backed by significant scientific research, which could lower development risks.‍
• Upcoming Milestones: Doug Drysdale indicated that clinical trial readouts are expected in the near future, which could serve as potential value inflection points for investors.

Industry Outlook:

• Sector Consolidation: The medical psychedelics sector is already consolidating, and Doug Drysdale expects that only companies with specialized niches and strong financing will survive.
• Industry Dynamics: The company operates in the non-traditional and somewhat controversial realm of medical psychedelics, offering both challenges and opportunities.
• Clinical Evidence and Potential: There's strong optimism about the transformative effect of psilocybin on patients with long histories of depression, signaling a promising market demand.

The Conversation

MedicalGold:

Hi, Doug. It's a pleasure to meet you. We share a mutual colleague, Robert Mino. I've known Robert for a few years,  so when I saw that Rob Mino joined as your internal counsel, I was like, wow, honestly, I didn't see that happening. I thought it was a pretty interesting pivot for him, but man, that guy's certainly a jack of all trades and a really talented individual!‍

Doug Drysdale:‍

Yeah, he really is. He's been a great addition to the team and yeah, we're definitely keeping him very busy, that's for sure. ‍

MedicalGold:‍

We wanted to ask you some questions and publish an update that's sort of centered around your perspective and just get an idea straight from the source what Cybin’s objectives are, what your personal objectives are, and what we can expect from the company in the next few months. So maybe we can start by just giving a brief background about yourself and the genesis of the company?‍

Doug Drysdale:‍

Okay. So I've been building drug development companies for a little over 30 years. I spent the first half of my career just doing a lot of R&D licensing and M&A. I've now acquired 17 companies across three continents. So that's kind of fun. I like doing that. But the last half of my career has been as a CEO of four different pharma companies. Two public, two private, two startups, and two turnarounds from pharma marketing companies to biotech. As a bit of a mix of things, I just love building teams and bringing products to market. Cybin was founded in late 2019. We went public at the end of 2020 and then we cross listed on the New York Stock Exchange in August of 2021 to help us get volume and access to investors while continuing to raise capital for the programs. 

I'll say that everyone in the company has a story. Everyone knows somebody that has been impacted by mental health in some way or other. A friend, a family member, a loved one. So it's pretty personal for everybody, and we all know how devastating it [mental health conditions] is. So when you see someone going through that [depression, anxiety, bipolar, et.], the opportunity to really make a difference is compelling. When I first started looking into psychedelics. I couldn't look away. In many careers in pharma, you end up working on products that are incrementally better than the last one that was approved. It's not often that you see real paradigm shifts and real innovation. And even when you do that, and you see that sometimes in gene therapy and other cell therapy, those are very high risk and very expensive programs. 

What we have here are some [psychedelic] molecules that we know an awful lot about because they've been around a long time, which equates to somewhat predictable risk from a development point of view. We know that they have the potential to work and we are confident that they can be made safe. Importantly, they appear to have long-term efficacy. So rather than dosing someone for weeks and months daily to see if they have some kind of small benefit, we're seeing patients changed after a single dose, sometimes within the same day.‍

MedicalGold:‍

You know, at MedicalGold we are true believers. We have our own personal experience with some of these substances, and we're sort of tapped into a community of like minded individuals. So I'm actually a biotech CEO myself. So I'm curious about your trajectory through the 17 different transactions and the companies you built…What space were they in? What size? Can you provide a little bit of color? ‍

Doug Drysdale:‍

So many of them [the M&A transactions] are dated back in the mid 2000s when I was head of M&A at Actavis, a global generics company and looking to always expand our portfolio and our geographic reach. We ended up building the company in 70 countries with 23 manufacturing plants and 17,000 employees. We ended up acquiring a small oncology manufacturing business in Romania, in Bucharest. Small capacity, but very high quality. A really great sign, so we bought a huge manufacturing facility owned by Pfizer in Milan.. and then transferred all the products from Romania to the big facility and pushed them into 20 markets. So we created something like a $1.5 billion enterprise out of spending roughly $200 million on those facilities. ‍

MedicalGold:‍

I think that's a great conduit to talking about Cybin’s R&D strategy. So, my understanding is you're creating deuterated forms of DMT and Psilocybin, and I'm really curious about the intellectual property protecting these assets, the genesis of the company, and your “Eureka” moment. How did you decide to go down this path of creating the deuterated forms? ‍

Doug Drysdale:‍

When we first started out, we were looking at ways to create differentiated and IP-protected products from these [DMT]  molecules that have been around since they were first synthesized 80, 90 years ago. Obviously, it’s hard to get IP from the native molecules; psilocybin in particular. One issue is that the metabolism [of psychedelic molecules] is highly variable between individuals. So one person might have a very profound experience, and someone else might have a very moderate experience from the same dose. We wanted to overcome this variability, so we created a “deuterated” form. Deuteration [substitution of selective hydrogen atoms with deuterium, its heavier isotope]  helps with metabolic stabilization and bioavailability.

We are finding two key characteristics of deuterated DMT: One, it extends the DMT experience. So instead of being a ten minute rocket ride, we're smoothing it out to more about like a 40 to 60 minutes experience, which provides time for patients to do the psychological work. Second, we have found that deuteration makes it [DMT] a lot more potent, providing psychedelic effects at much lower doses. That means we can create a very small volume injectable, like a subcutaneous injection instead of requiring an IV infusion pump. So that's a big shift in helping with getting patients access to the product. 

Now, the genesis of Cybin’s deuteration strategy starts with an acquisition. We acquired Adelia Therapeutics, based in Boston, at the end of 2020. We have a lab there that came from that acquisition, and they brought with them the deuteration technology and IP. From this seed we’ve rapidly expanded the development pipeline and beefed up the IP.‍

MedicalGold:‍

And if I recall, you also acquired Entheon, right? ‍

Doug Drysdale:‍

Well, we acquired a clinical study from Entheon. This is actually pretty smart, I think, in that while we were still developing our deuterated version of DMT, and we hadn't completed all the toxicology studies so we couldn't dose humans yet. We wanted to quickly start taking a look at DMT and understanding more about the PK/PD [pharmacokinetics and pharmacodynamics] parameters, so we acquired an ongoing DMT study in the Netherlands, an active CTA [clinical trial application] that gave us access to a 50 subject study that was already ongoing. Now, we've been able to  bolt on to that study repeatedly and without going through all the time and the risk and the cost of setting it up and filing the CTA from scratch. This accelerated our DMT program by over a year, for just $1M, which was a great move because a year of burn is obviously a heck of a lot more than $1 million. Time is everything. 

“Being wrong might hurt you a bit, but being slow will kill you. If you can increase the number of experiments you try from a hundred to a thousand, you dramatically increase the number of innovations you produce.”

~ Jeff Bezos, Amazon founder

MedicalGold:

Did the Entheon acquisition also provide GMP-grade DMT drug product?. ‍

Doug Drysdale:‍

Yes, the non-deuterated form. But this was fine to study the pharmacodynamic effects [e.g., efficacy] because the deuteration mostly influences the pharmacokinetics [e.g., how long the drug lasts in the bloodstream].‍

MedicalGold:‍

This is a great transition discussing the Small Pharma M&A because that's another extension of a DMT program, correct?

‍Doug Drysdale:‍

Yeah, that's right. So they [Small Pharma] started quite a bit before us in 2015, and we've been working very adjacently. So, weirdly, there's no real overlap between what we're doing. We're both working on deuterated DMT, but different analogues and different formulations and different indications. Instead of two overlapping data sets, we have two parallel data sets that really expands our knowledge, expertise, and IP. So rather than be bumping along next to each other for the next several years, we decided to combine. And there's a lot of strength in that combination. In total, we'll have over 150 pending patents and 29 granted patents. Now, we have no worry about bumping into each other at some point in the future. ‍

MedicalGold:‍

Okay, let's talk about that IP. What kind of claims do you have? ‍

Doug Drysdale:‍

It's very broad, as you can imagine, from composition of matter [of different salt forms], methods of use, and stabilization. This is a very deep patent portfolio with multiple “moats” of protection.

‍MedicalGold:‍

I know that deuterated DMT was synthesized decades ago, so what is the ingenuity here? ‍

Doug Drysdale:‍

Yeah, I think that's an important point because I don't think that people are really seeing the benefits of deuteration. It's all theoretical until we show data, and we have data from our deuterated psilocybin analog coming up in the next 2-3 months. So what we saw preclinically is a big improvement in bioavailability and an improvement in brain penetration, making the molecules more potent and effective at lower doses. most of the side effects happen because the drug is interacting with serotonin receptors in the gut, inducing nausea. So if you get the drug out of the periphery and into the brain, potentially you're reducing side effects, but for sure the drug is more efficient and potent. These demonstrable benefits of deuterated DMT and psilocybin are what justify patent protection.‍

MedicalGold:‍

Right, so you were able to get the composition of matter on the deuterated forms of psilocybin and DMT without showing any sort of PK or PD data that shows its benefit. ‍

Doug Drysdale:‍

Well, you start with prophetic claims, of course, and then we've been demonstrating them. So of course we've been filing that preclinical data and clinical data alongside as well. ‍

MedicalGold:‍

Okay, so basically you're playing the game with the patent office, getting your non provisional set up, starting to file claims, waiting for them to come back, and by the time they come back with office action requests, you're going to supply the data. Is that your strategy?‍

Doug Drysdale:‍

So many of these patents are continuations while we keep adding data. We have a composition of matter patents across a number of different analogs. ‍

MedicalGold:‍

Fantastic. Yeah, that [composition of matter patents] is the Holy Grail. That's fantastic. Okay, let's talk about some upcoming catalysts. What should we be looking for? What should we be excited for? ‍

Doug Drysdale:‍

There are  three main catalysts coming just this year. In the next few months, one of those will be closing the Small Pharma transaction. I think that's a very exciting move for us and I think it really cements us as a leading company in the space. Second, we have a Phase 1 study readout from our deuterated DMT program that's been quite a large and extensive program to understand the pharmacodynamics [i.e., efficacy] of native DMT and deuterated DMT. DMT that doesn't really get you what you want to know with a single injection of DMT, so we expect to prove that the deuterated DMT performs substantially better. And third, the most exciting catalyst that's coming is the readout from our Phase 2 study in depression of our psilocybin analog. 

In this Phase 2 study, we'll see for the first time the efficacy and safety data that will differentiate our deuterated psilocybin from anything else available on the market. 

MedicalGold:‍

So you just put out some press that you've already started making the GMP batch [of psilocybin] for the Phase 3 study of psilocybin as a treatment for major depressive disorder.‍

Doug Drysdale:‍

That's right. That'll be ready by 1Q24 to begin the Phase 3 study. ‍

MedicalGold:‍

How would you explain the differentiating factors between Cybin and the rest of the sector, and what is something that you think that most shareholders do not understand… things that new biotech investors might not grasp initially?‍

Doug Drysdale:‍

I think this truly has the potential to be a complete paradigm shift in treating depression. Almost a billion people around the world are affected by some form of mental health disorder: depression, addiction, eating disorders. There are 300 million people suffering from depression and treated with several multibillion dollar antidepressants that barely work. So, what we have here is something that could completely change the treatment landscape, be radically more effective, and work really quickly. We're talking about one, two, or maybe just three doses a year. We have two valuable  assets CYB003 and CYB004 that we believe have the potential to be truly transformational. Eventually the data will come out. Eventually people will understand the significance of what we are doing. For now, we just have to be patient, even though it's a little bit frustrating when you're not getting the message across. 

But to be fair, we haven't yet delivered data, and that's what's coming in the next couple of months, right? So we are on the cusp of several important milestones. ‍

MedicalGold:‍

Let's actually step back. You mentioned dosing. I forgot to ask you what is the dosing schedule of the Phase 2 data that's going to come out, and what are your primary endpoints of the study?

‍Doug Drysdale:
We anticipate that deuteration provides more efficacy and a better side effect profile.  Our Phase 2 study involves a two dose regimen delivered three weeks apart. And the reason for that is we really want to see durability in the antidepressant effects. 

Often, the first experience for somebody can be a little scary, perhaps even a little traumatic. Reliving experiences and digging into their underlying traumas is very powerful. However, the second experience is a little easier to handle because you've been through it once before. The first dose is designed to deliver those rapid results, and the second dose is designed to really solidify those effects and maybe provide some longevity in the antidepressant effect. ‍

MedicalGold:‍

In these studies are you going to run a second control arm with a non-deuterated form? ‍

Doug Drysdale:‍

No, I think there's been plenty of work done on the non-deuterated. Small Pharma has a non-deuterated Phase 2 study readout and Compass Pathways has their psilocybin that's non-deuterated. So we already know that the molecules work from those studies. That gives us great proof of concept. The deuteration is just really about improving the PK and the durability of the response. ‍

MedicalGold:‍

Let's move on to some capital markets questions. Do you expect there to be a share rollback by the end of the year? ‍

Doug Drysdale:‍

You mean a consolidation of some kind? I'm not really a big fan of doing those for no reason, and I also hate to do them for compliance reasons because they never really turn out very well. Often the stock just trades down again after the consolidation. We're not under any pressure to do that. I think “event driven” consolidations can work, but I wouldn't want to just do one for the sake of doing it. ‍

MedicalGold:‍

Yeah, that makes perfect sense. I never thought about it that way. So let's talk about the amount of cash you have and your forecast. What do you have on hand right now? And do you think you're going to need to do a financing in the near future? 

‍Doug Drysdale:‍

Yeah, we will need to do a financing at some point as we're going into Phase 3 with CYB003 [Cybin’s deuterated psilocybin drug], and we're stepping up into Phase 2 with deuterated DMT. So another financing at some point is inevitable. That's just the nature of tech. We had last reported $18 million on our balance sheet, and Small Pharma had $13 million on the balance sheet. So we'll have a bit of cash coming from the transaction. We have two facilities right now that we have access to, an at-the-market program and a stock purchase agreement in place.. So those collectively give us potential access to $65 million (USD), which we can tap into until we're at a point where the market conditions, the pricing, the terms, a data catalyst, something like that, all come together to provide the right opportunity. So those facilities buy us time so that we can be a bit selective. ‍

MedicalGold:‍

How expensive do you think the Phase 3 trial will be?‍

Doug Drysdale:‍

We are going to conduct two pivotal Phase 3 trials. I imagine, based on the recent draft guidance from the FDA, that our first one looks to be about a couple of hundred patients. It lasts about 18 months, 24 months probably in a region of $30 million, something like that. So fairly reasonable in terms of cost for a study of that size. And that's because this is essentially acute dosing. ‍

MedicalGold:‍

And do you expect to run those clinical trials  in the United States or Canada? ‍

Doug Drysdale:‍

It'll be largely US based. But we'll have some sites in Europe, probably targeting English speaking countries just from a cost point of view. We'll  also need some multinational sites. The Small Pharma transaction is helpful there because they're UK based, and have some clinical sites on the ground in Europe, which is going to be very helpful for helping to manage that study. ‍

MedicalGold:‍

Fantastic. Are the shares that Small Pharma will receive freely trading immediately, or is it a lockup? ‍

Doug Drysdale:
Freely trading for the Small Pharma shareholders. There's the lockup for insiders and for those large shareholders that have signed their support agreements, but for other shareholders, they will be free trading immediately.

MedicalGold's Chart Take

CYBN shares have put in place a series of higher lows since putting in place an important low in June near $.22/share. The August low offers evidence of a selling climax with volume spiking but price making a higher low relative to June. CYBN is well positioned to deliver share price performance in the final months of the year as the company achieves key milestones and prepares to initiate a phase 3 study of psilocybin as a treatment for major depressive disorder (MDD) in Q1 of 2024.‍

MedicalGold:‍

How do you see the medical psychedelics landscape shifting over the next few years? And what do you think about consolidation? Is the sector going to consolidate to clean up balance sheets and create some synergies? ‍

Doug Drysdale:‍

Yeah, I think the sector is already naturally consolidated and somewhat accelerated by the sort of biotech bear market that we've had, and the lack of access to capital for a lot of companies. So you look back two, three years ago, there were 50 or 60  companies claiming to be doing work in the psychedelic space. Now, there's really only a handful of credible psychedelic drug development companies. There's still a few straggling folks, companies that will probably end up getting acquired just because they can't access capital. But the handful of companies that are still existing are strong, and each has their own niche, working on slightly different molecules and slightly different indications. It may consolidate a little further,but there's a lot of natural fading away of companies that has happened over the last couple of years already. ‍

MedicalGold:‍

When do you think you're going to start the Phase 3 [study of psilocybin as a treatment for major depressive disorder]? ‍

Doug Drysdale:‍

We should be ready. We expect to have an end of Phase 2 meeting with the FDA in 1Q24. We'll submit the data in 4Q23, and have the meeting in quarter one. By the end of quarter one next year, we should be able to initiate the study. That's our expectation. ‍

MedicalGold:‍

So at that point, will Cybin be the leader in psilocybin?‍

Doug Drysdale:‍

Well, Compass Pathways has a Phase 3 program underway, so they're a little ahead of us, maybe six months or so with the native compound. But we'll be pretty following right behind with what we hope is an optimized asset. ‍

MedicalGold:‍

And will you be going for treatment resistant depression as well? ‍

Doug Drysdale:‍

No, what we're studying right now is major depressive disorder, MDD,  in moderate to severe depression with patients that are not controlled on SSRIs, which is pretty much everyone. So you see people very typically cycle between two, three, four different SSRIs, either for efficacy reasons or side effects that they're dealing with, which can be quite troubling. But most people taking SSRIs end up still with breakthrough depressive episodes. So we're looking at a very large unmet need here [for MDD]. I think historically companies have gone after treatment resistant depression because drugs have historically been only incrementally better. And so how do you justify those in MDD where you've got cheap generic SSRIs available? So targeting the more treatment resistant patients is seen as the logical market to go after. But when you got something that's a paradigm shift, then this is something that could work for everyone. 

Why wouldn't we go after MDD? ‍

MedicalGold:‍

Right. Are there any technical challenges or practical realities of why you would choose TRD over MDD or vice versa? ‍

Doug Drysdale:‍

TRD patients, by their “resistant” nature, are going to be more challenging. It may be that many of those resistant to SSRIs are resistant to psychedelics as well. We saw in the COMP360 study some incidents of suicidal ideation not caused by the drug, but most likely just by the nature of those patients. That's the state they're in.  Many TRD patients are highly demotivated,  but when they feel better, they become motivated and then this activity [suicidal ideation] happens. So it's a difficult treatment population, TRD. But look, MDD is a substantially larger population and most patients on SSRIs are uncontrolled and not in remission. 

We think we've got something that could help.‍

MedicalGold:‍

Yeah, that makes perfect sense. All right, we're coming up on time. Let me ask you one more question. So in this role, what have you found to be particularly exciting or fun or challenging as it relates to your previous roles and you've had such a long career. What's unique about this? ‍

Doug Drysdale:‍

A couple of things. One, these are not going to be some innovation that's just a little bit incrementally better than the last iteration. It is really remarkable to talk to investigators in the study and just see their faces and see how excited they are when they have people that are coming in with a 20-30 year history of depression and are transformed overnight after a single dose. You can see their excitement and that excites me. Second, working in medical psychedelics is a little different from the “blue chip” biotechs in that the psychedelic community is a little bit non-traditional and the psychedelic subject itself is a little bit controversial. We are doing something unprecedented and a bit out of the box. ‍

MedicalGold: ‍

Thank you so much for your time and insights, Doug. We will continue to follow the Cybin story and look forward to your clinical trial readouts later in the year!

Disclosure

MedicalGold has no relationship with Cybin and the author has no position in CYBN shares at the time of publishing. The article is presented for informational and entertainment purposes only and is not a recommendation to buy or sell any security