Psychedelics have a rich history, one that began well before the 1950s, when chemist Albert Hofmann synthesized lysergic acid diethylamide (LSD) and psilocybin. Nonetheless, Hofmann’s work can be credited with opening a new chapter to the psychedelics story. His discoveries encouraged researchers to explore how psychedelics could be applied in psychiatry. Over a period that lasted about two decades, hundreds of studies were performed.

Some of the most promising studies suggested that psychedelics could be used to treat mental illnesses such as anxiety, depression, and alcoholism. However, as psychedelics attracted medical interest, they also stimulated recreational use. This led to the Convention on Psychotropic Substances of 1971, a United Nations treaty. It placed a global ban on all psychedelics, and it ended the production of medical-grade compounds and any related research funding and studies.

Today, we are seeing a resurgence of psychedelics and other dissociative drugs in the research and medical communities. The drugs are seen as a way to meet a growing unmet need for mental disorder treatments. Although the mechanisms of action for the drugs are still unclear, scientists believe that the drugs work by stimulating the release of reward chemicals such as dopamine or oxytocin, and by facilitating neural connectivity between brain regions. Scientists also think that the drugs enable patients to open up emotionally without suffering self-criticism. This capability may allow patients to confront and successfully address the emotional consequences of trauma.

Thus far, psychedelics have had little success securing approvals from the U.S. Food and Drug Administration (FDA). The psychedelic named ketamine gained FDA approval in 1970, but only as an anesthetic. Although ketamine has antidepressant effects and is offered off-label in intravenous form by some hospitals and clinics, the drug has not been approved by the FDA for the treatment of any psychiatric disorder. In October 2023, the FDA issued an alert about the risks of treating psychiatric disorders with compounded versions of ketamine.

More encouragingly, a ketamine derivative called esketamine won FDA approval in 2019 for patients with treatment-resistant depression. Another psychedelic, 3,4-methylenedioxymethamphetamine (MDMA), may soon gain FDA approval now that MAPS PBC, a prescription psychedelic research company, has staged two Phase III clinical trials in which MDMA was successfully used to treat patients with post-traumatic stress disorder.

Psychedelic drugs still pose many development and testing challenges, including funding and supply constraints and limited patient accessibility. Nevertheless, galvanized by the success stories, companies are tirelessly working to study more types of psychedelic and dissociative drugs, identify other diseases they can treat, and improve the drugs themselves.

Are hallucinations really necessary?

Although ketamine has been used in hospitals and veterinary clinics as an anesthetic for decades, it has attracted notice only recently for its antidepressant effects. At present, ketamine treatments are being developed for a variety of illnesses. One company doing this work is Silo Pharma.

“Drugs in this class work on the brain,” says James Kuo, MD, vice president of research and development, Silo Pharma. “And the brain is involved in many illnesses.”

Silo Pharma is testing drug candidates that could relieve the pain caused by fibromyalgia, or lessen the stress and anxiety experienced by patients with Alzheimer’s disease. The company is also addressing the timing issues that attend the use of psychedelic and dissociative drugs.

With respect to timing, psychedelics offer certain advantages—and one big disadvantage. Let’s begin with the advantages. Unlike traditional antidepressants, which take effect after several weeks, psychedelics take effect immediately. Also, psychedelics have effects that can last for months. And the disadvantage? Psychedelics can cause a “high” that lasts several hours, requiring those who receive a psychedelic treatment to stay at a clinic overnight. Many patients would be unable or unwilling to make such a time commitment.

This is a problem that Silo Pharma hopes to solve with a sustained-release delivery system. The company is developing a ketamine-loaded implant that can enable at-home drug delivery. With this implant, ketamine can be delivered so gradually that its hallucinogenic
effects are diminished. Silo Pharma plans to study the effects of implant-delivered ketamine on patients with fibromyalgia to determine if hallucinations are necessary for treatment.

“There is a big debate within the psychedelic community about whether the hallucinogenic effect has to occur for a therapeutic benefit,” Kuo says. “No one truly knows the answer.”

Increasing accessibility

The association that psychedelic drugs have with wild trips is quite a burden for drug developers and medical professionals. It has contributed to skepticism and resistance to psychedelics. Federal regulations alone have resulted in some of these drugs, such as MDMA, being in short supply. Many companies are reluctant to commit to production.

PharmAla Biotech is not one of those companies. One of the reasons it was founded was to help overcome the global MDMA shortage by manufacturing and distributing MDMA to research laboratories and clinics worldwide—wherever studying and prescribing MDMA is legal. The company is currently supporting over a dozen clinical trials in the United States, Canada, and Australia.

PharmAla Synapse illustration
A mechanism of action for MDMA has been suggested by research involving PharmAla Biotech, a company focused on ensuring the supply and enhancing the safety of MDMA and its analogs. 1. Synaptic MDMA binds to SERT and is transported into the cytosol. 2. MDMA binds to VMAT2 and causes it to release vesicular 5-HT. 3. Cytosolic 5-HT rises in concentration and is transported into the synapse. 4. Synaptic 5-HT binds to various receptors. 5-HT: 5-hydroxytryptamine; MDMA: 3,4-methylenedioxymethamphetamine; SERT: serotonin transporter. VMAT2: vesicular monoamine transporter type 2.

While the results are promising, the side effects associated with MDMA, such as a rise in blood pressure and temperature and in body temperature, limit the patient population to those without any indication of cardiac issues. However, PharmAla Biotech is seeking to overcome this challenge as well and thereby expand the number of patients who could benefit from this drug.

“We’ve identified regions of the molecule that bind to receptors and cause it to be toxic, and we’ve changed that chemistry,” says Harpreet Kaur, PhD, vice president of research at PharmAla Biotech. “It still binds to the receptors and does the work on the transporters that we need to show the efficacy, but it doesn’t bind with the same intensity to the negative receptors.”

In animal studies, PharmAla Biotech has demonstrated that its molecule, ALA-002, does not result in a rise in body temperature or blood pressure. ALA-002 also has a much lower abuse potential than generic MDMA. A Phase II trial will begin in 2024 to treat social anxiety in autistic adults.

Minimizing adverse effects

Tactogen is another company working to make MDMA safer—safe enough so that it could be taken at home, increasing treatment accessibility. The company is developing new molecules based on the MDMA structure that minimize adverse side effects such as blood pressure changes and the “high” feeling, while still maintaining the positive effects.

Compass figure 2
Tactogen’s candidate compounds, developed to minimize adverse events, contain the chemical substructure benzofuran. In a preliminary analysis comparing another benzofuran-based molecule, 5-MAPB, to MDMA, Tactogen scientists found no difference in the degree of change in social anxiety and self-compassion. However, 5-MAPB did not have as strong an effect on high-energy, positive emotions as did MDMA, suggesting potentially lower abuse liability.

“MDMA and drugs in its class seem to help people contemplate without discomfort things that would normally be upsetting,” says Matthew Baggott, PhD, the co-founder and CEO of Tactogen. “Traumatic events that would normally cause panic can be evaluated in a grounded, sympathetic manner that weakens the hold the events have on people. This type of pharmacotherapy seems to help people get unstuck and move forward with their lives. We seek to retain the self-compassionate, nonreactive effects that make the molecules so useful for mental health.”

Tactogen has several promising candidate compounds in development. Preclinical tests in animals suggest that they are well tolerated, retain the key effects of MDMA without depleting serotonin, and may have durable fast-acting antidepressant effects. Tactogen is preparing for clinical trials and anticipates beginning Phase I trials with healthy volunteers and Phase II trials in patients with post-traumatic stress disorder within 18 months.

Creating a long-lasting response

Another psychedelic drug showing great promise as a treatment for mental health disorders is psilocybin, the hallucinogenic compound found in certain mushrooms. For example, a synthetic psilocybin from Compass Pathways has performed well in patients with treatment-resistant depression. Phase III testing of the drug, COMP360, started in 2023.

Compass reports that a single dose of COMP360 could have long-lasting effects, acting more durably than esketamine, for example. (Esketamine is often given weekly.) Compass’s Phase III program will investigate whether a second or third dose could be more effective for some patients. Even in these cases, and even with psilocybin treatment taking several hours longer than esketamine, this would greatly reduce the number of doctor visits, potentially leading to greater patient compliance.

efficacy of its proprietary, synthetic formulation of psilocybin illustration
Compass Pathways demonstrated the efficacy of its proprietary, synthetic formulation of psilocybin, COMP360, on patients with treatment-resistant depression in a Phase IIb trial. The MADRS score (a depression rating) showed a highly significant and clinically relevant effect at the week 3 primary endpoint with a 25 mg dose compared to a 1 mg dose. The benefit of the 25 mg dose was evident at day 2 and week 1 following administration, confirming the rapid-acting nature of the effect.

“We’re very encouraged by the success of esketamine, which shows that this kind of time-demanding treatment can be achieved within the U.S. healthcare system,” says Guy Goodwin, MD, PhD, chief medical officer of Compass Pathways. “[It’s significant that these] inroads can be made with a very demanding program, where patients comply and actually come back for more, and we think that we’re offering an advantage over that.”

In Compass’s Phase IIb trial, a single 25 mg dose of COMP360 reduced depression scores significantly more than a 1 mg dose and resulted in a 20.3% sustained response rate at the end of the study, 12 weeks after treatment.

Overall, the effects were well tolerated. However, in the 233 patients, there were 19 serious adverse events, including suicidal thoughts and self-injury in about 5% of the study population. These are not unusual considering the patient group, and Compass will further characterize the safety profile of COMP360 in its Phase III trials.

Compass is also working on treatments for other mental health disorders and is nearing completion of an open-label, Phase II trial on patients with post-traumatic stress disorder. The company plans to publish the results in the coming months.

Making a treatment worthy of funding

Forward-thinking drug developers like those mentioned in this article are exactly what some investors are looking for. These investors believe that it’s not enough for companies to focus on what the drugs can do, but that companies also need to consider how their drugs will be accessed and what safeguards will be in place to avoid their abuse, especially considering the vulnerability of the population that would use these drugs.

“What does the future and success look like if these treatments get approved and rolled out into the clinic?” asks Dana Watt, PhD, principal at Breakout Ventures. “When you take medications that are conducted in a brick-and-mortar setting that require a lot of staff, there’s a big risk of having some problems that we’ve seen in other areas of assembly-line medicine.”

Dialysis centers and ketamine clinics have both met their fair share of concerns over their safety practices and high costs. But in addition to the risk of abuse, physical infrastructure and staffing require a lot of capital. Those companies developing safer, at-home psychedelic treatments could be a way to reduce costs while also reaching a larger population.

Overall, investors such as Breakout Ventures are exercising due caution before investing. They are waiting for more clinical evidence of the effectiveness of the new psychedelic treatments and more detailed exit and financing information.

“This is such a nascent area, and there haven’t been a lot of success stories yet,” Watt observes. “But when we have something like this that has been used for hundreds of years, I think one of the really interesting things is the maturity of the psychedelic story and how the passed-down wisdom has real scientific weight behind it.”

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