Jul 11, 2023

Improbable Allies Unite In Anticipation Of Imminent Ecstasy Legalization

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If not for MAPS’ announcement of Rick Perry’s inaugural address at Psychedelic Science 2023, nobody would believe that the Republican juggernaut would attend (let alone endorse) the largest ever psychedelic summit catered towards practitioners and proponents of medical psychedelic research. Perry greeted the audience in comedic fashion, acknowledging the irony of his presence by referring to himself as a “knuckle-dragging, right-wing Republican, former governor of the state of Texas”. At first glance, Perry’s public support of medical psychedelic research seemingly contradicts the US conservative party’s hardline stance on drugs, but the resurgence of research into the treatment of post-traumatic stress disorder (PTSD) with psychedelics explains the former Governor’s appeal to a key component of his shareholder base: veterans, their families, and red-blooded American patriots.

A tale of two Rick’s

Perry was joined by Rick Doblin, founder of the Multidisciplinary Association for Psychedelic Studies (MAPS) and sponsor of the conference, in advocating for MDMA  (street name “Ecstasy”) as a first-line treatment for PTSD, which affects at least 5% of US adults and has no effective pharmaceutical treatment. Veterans are at heightened risk for PTSD, especially those who served in combat zones and witnessed first hand the pyrrhic atrocities of battle. The incidence of PTSD has increased exponentially since WWII even though the art of war has become more tactically precise and attrition no longer the modus operandi. This observation is likely influenced by the selection bias inherent in the study, as described in the note underneath the table. Regardless, PTSD is an intractable disease that demands an effective pharmacological solution.

MAPS has been the medical psychedelic industry's most prominent and proliferative advocate since Doblin founded it in 1986 to explore the medical potential of MDMA, which was regarded as a party drug and annexed to the realm of Schedule 1 substances by the DEA. Since inception, MAPS has raised over $130M and funded over 150 clinical trials and research projects on psychedelics, playing a key role in the re-emergence of psychedelic research in the United States. The Associations’ recent completion of their second pivotal Phase 3 study of MDMA as a treatment for PTSD met both its primary endpoints, and results are expected to be published in 3Q23. MAPS will file a New Drug Application (NDA) with the FDA later this year, which will place MDMA on track for approval in 2024. The non-profit’s work has not only helped to change the way people think about and talk about psychedelics, but has also paved the way for the development of new and innovative psychedelic-assisted therapies.

Catch up on the status of ongoing psychedelic clinical trials

Rick Perry’s political advocacy for medical psychedelic research began with his bipartisan support of House Bill 1802 alongside Rep. Alex Dominguez, D-Brownsville. Filed in February 2021, the bill would require the Health and Human Services Commission (HSC) of Texas to conduct a literature review of prior studies that investigated the therapeutic potential of psychedelic substances (including psilocybin, MDMA, and ketamine) to treat PTSD, and then partner with a university and Veterans Affairs hospital to actually conduct their own clinical study of psilocybin. Accountability measures require the HSC to submit quarterly progress reports on their study, which must be completed by Dec. 1, 2024. Texas’ House and Senate voted unanimously in favor of HB 1802 and it was made effective by Governor Greg Abbot on June 18, 2021. More recently, three additional amendments were filed to expand the scope of the state-sponsored research and create two additional counsels of psychedelic researchers and mental health experts to advise on the project.

Rippling regulatory effects

The regulatory landscape for psychedelics in the USA is fragmented and rapidly evolving. The division between federal, state, and municipal law adds to the complexity of the issue and affects the legal status, which itself has multiple classifications (illegal, decriminalized, and legal), that pertains to the cultivation/manufacturing, possession, sale, and intended use of the substances. Texas House Bill 1802 adds to the growing list of states and municipalities that have decriminalized possession of psychedelics for medical research and personal use, legitimizing their medical potential in even the most conservative, anti-drug state. As of July 2023, Oregon and Colorado are the only states to have fully legalized psychedelic compounds for recreational use, paving the way for the rest of the country. Washington, DC followed suit by decriminalizing possession of psilocybin, psilocin, ibogaine, dimethyltryptamine, and mescaline. Approximately half a dozen other states and a dozen municipalities have proposed bills that would decriminalize possession for either recreational or medical use.

While politicians and their constituents continue to advocate through legislation, the scientific community is boldly advancing the legitimacy of the drug class through empirical experimentation. MAPS’ two pivotal Phase 3 studies are unequivocally the most significant clinical trials of a psychedelic substance to treat mental illness conducted to date, and the approval of MDMA by the FDA will instigate a monumental shift in the regulatory status of psychedelics at the federal level. If the Agency believes that MAPS’ two Phase 3 studies provide ample evidence of the safety and efficacy of the drug, then MDMA will likely gain full authorization for the treatment of PTSD in 2024 and be de-classified as a Schedule 1 substance.

Refresh your memory on the history and science of psychedelic substances

The FDA’s interpretation of MAPS’ MDMA safety data will also establish a precedent for MDMA clinical studies which, if favorable, could be leveraged by other investigators to de-risk their Investigational New Drug applications (possibly advancing future MDMA studies directly into Phase 2 trials). A favorable stance by the Agency will signal the clinical validity of the entire drug class, accelerating development of similar psychedelic analogs and catapulting the industry into the limelight. The FDA’s recently published draft guidance for psychedelic studies is further evidence that medical psychedelics are evolving into an asset class on par with established small molecules and biologics.

Capitalization of companies that span the industry vertical is further proof that investors are banking on imminent FDA approvals and the commercial viability of medical psychedelics. As the sector graduates from research and development and heads towards commercialization, the need for a GMP-grade supply of MDMA (and other psychedelics such as psilocybin, LSD, and DMT), coupled with trained psychedelic-assisted clinicians operating in specialized wellness clinics, is being fulfilled by startup biotechs operating in the USA and CA. MedicalGold has identified these major players that are best positioned to profit once MDMA is approved and the industry “goes live”.

Companies to watch

  • Numinus – leading the industry in development of wellness clinics, network of psychedelic-assisted therapy trained psychologists, and management of psychedelic clinical trials (CRO services). The company’s network of wellness clinics generated revenue of C$5.7 million in Q1 2023 , a 35.7% sequential increase from C$4.2 million in Q4 2022, and a 669.5% increase compared to C$789,617 million during the same period last year. The strong revenue growth was a result of increased demand for psychedelic-assisted therapy provided by their network of 12 wellness clinics in the USA and Canada (generated 88% of revenue). Numinus' clinics offer a much wider range of services than their competitors, who are limited to ketamine-assisted therapy. This explains the nearly 19,800 appointments completed during the quarter, a 13.7% increase over the prior quarter.
  • PharmAla – largest manufacturer of GMP-grade MDMA (“LaNeo”) globally, authorized to distribute in AU for research purposes. PharmAla is positioned to capture the commercial MDMA manufacturing market by leveraging its pre-existing infrastructure and relationships formed as the largest supplier MDMA to clinical trial sites in AU. Its materials have already been approved by Human Research Ethics Committees (HRECs) in several major universities within Australia, allowing it to be used in human clinical studies.
  • MindMed – advanced Phase 2b study of LSD for the treatment of anxiety (ongoing). MindMed's pilot Phase 2a study of LSD was published on September 2, 2022, and investigated the effects of 200ug MM-120 (LSD) on anxiety at 16 weeks using the Spielberger State-Trait Anxiety Inventory–Global score in 42 patient and observed significant reductions in anxiety scores up to 16 weeks after treatment. The market is eagerly anticipating the Phase 2b results, as evidenced by the stock price hovering around the $3.74 resistance level waiting to break out.
  • Small Pharma – advanced Phase 2a study of DMT as a treatment for major depressive disorder. Study met the primary endpoint demonstrating a statistically significant and clinically relevant reduction in depressive symptoms two-weeks following a dose of SPL026 with supportive therapy, compared to placebo, demonstrating a -7.4 point (clinically meaningful) difference in MADRS (p=0.02). The company recently issued an update on their drug development strategy.
  • Compass Pathways – recruiting for a Phase 3 study of psilocybin as a treatment for treatment resistant depression (TRD). The design of this study was informed by Compass' Phase 2b study on COMP360 for treatment-resistant depression (TRD). The Phase 2b revealed that a 25mg dose led to remission in 30% of TRD patients by Week 3 and sustained response through Week 12 in twice as many patients compared to a 1mg dose. However, 77% of participants experienced adverse effects, including suicidal ideation or self-injury, which led to a 24% drop in Compass's stock. Despite promising early results, less than a quarter of patients maintained their response at Week 12, showing COMP360's limitations as a comprehensive TRD cure. The correlation between dose level and adverse events, although concerning, isn't seen as an acute, drug-related effect.
  • Cybin – developing proprietary psilocybin and DMT analogs. Cybin announced that they expect pivotal clinical data readouts in the latter half of 2023. These include results from the Phase 1/2a trial of CYB003, a proprietary deuterated psilocybin analog developed for treating major depressive disorder (MDD), and the Phase 1 trial of CYB004, a deuterated N,N-dimethyltryptamine (DMT) molecule being evaluated as a potential treatment for Generalized Anxiety Disorder. Interim findings from the ongoing Phase 1/2a clinical trial for CYB003 have demonstrated positive observations, such as a rapid, short-acting psychedelic response in participants at 8mg and 10mg doses, with no serious adverse events reported. The company anticipates completion of CYB003 dosing in MDD cohorts in Q3 2023, followed by topline efficacy data readout in late Q3 2023, and FDA submission of CYB003 Phase 1/2a data for pivotal studies in Q4 2023. As for CYB004, topline data readout, including safety, dosing, and pharmacokinetic and pharmacodynamic data, is expected in late Q3 2023.

FDA Approval For MDMA Is Coming Next Year: Here Are The 3 Companies Positioned To Profit Most

Key charts

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