The psychedelic industry has been abuzz with hope and optimism in recent years, especially as companies like Lykos Therapeutics have worked toward bringing innovative therapies to market. One of the most highly anticipated developments was the potential approval of MDMA-based therapy to treat post-traumatic stress disorder (PTSD). However, a recent decision by the Food and Drug Administration’s (FDA) Psychopharmacologic Drugs Advisory Committee (PDAC) to reject the proposed therapy has sent shockwaves through the industry, leaving investors, stakeholders, and even the general public grappling with the implications.
While this rejection was a blow to the psychedelic therapy sector, it has also provided valuable insights and lessons for the industry. For investors, it served as a stark reminder that the road to FDA approval for psychedelic drugs is still long and fraught with challenges. Yet, despite the setback, industry insiders remain confident that psychedelics have a future in behavioral health, and they believe the lessons learned from this experience will ultimately strengthen the sector.
The Rejection of MDMA-Based Therapy for PTSD
In a highly anticipated FDA advisory committee meeting, the Psychopharmacologic Drugs Advisory Committee voted overwhelmingly against Lykos Therapeutics’ MDMA-based therapy as a treatment for PTSD. The vote was a decisive two-to-nine rejection on whether the therapy was effective and a one-to-ten rejection on whether the benefits outweighed the risks. This decision came as a major setback for the company and for the broader psychedelic industry, as MDMA-assisted therapy had been seen as a promising, novel treatment for PTSD, especially for veterans and first responders.
MDMA-based therapy, often referred to as MDMA-AT, has been touted as a revolutionary approach to treating PTSD due to its ability to help patients confront traumatic memories and establish trust with their therapists more quickly than traditional treatments. MDMA works by increasing serotonin levels in the brain, which enhances emotional experiences and provides therapeutic benefits, particularly in trauma therapy. Unlike traditional selective serotonin reuptake inhibitors (SSRIs) or cognitive-behavioral therapies, MDMA-AT helps break through the emotional walls that trauma survivors often build around their memories, making them more receptive to psychotherapeutic techniques.
However, despite the positive preliminary clinical data and the enthusiasm surrounding the treatment, the FDA advisory committee expressed concerns about the therapy’s efficacy, safety, and the subjective nature of the treatment experience. The treatment involves not just the administration of MDMA but also an intensive psychotherapy process before and after the medication sessions, which complicated the evaluation of the drug from a regulatory perspective. The committee raised concerns about the combination of medication and psychotherapy and questioned whether MDMA itself could deliver the promised benefits without more extensive real-world safety data.
Investor Confidence Takes a Hit
The rejection of Lykos Therapeutics’ MDMA-based PTSD treatment was a significant blow to the psychedelic sector, especially in terms of investor sentiment. Following the announcement of the committee’s vote, shares in psychedelic companies plummeted, with many stocks in the sector experiencing significant declines. The market reaction reflected a growing sense of uncertainty among investors about the viability of psychedelics as a mainstream treatment option, especially given that the FDA’s approval process for novel psychedelic drugs is far from straightforward.
Daniel Love, co-founder and partner of Beckley Waves, a venture studio focused on psychedelics, acknowledged the disappointing outcome but remained optimistic about the long-term future of the industry. “The immediate market reaction reflects investors seeing an additional risk, but this does not diminish the long-term potential of psychedelics in behavioral health,” he said in a statement. “Just as an example, there are now over 200 clinical studies underway across more than 70 universities, and now hundreds of related companies. All that progress is hard to stop entirely.”
While the rejection has dampened investor enthusiasm in the short term, many experts believe that it’s crucial not to lose sight of the bigger picture. The psychedelic industry has already made significant strides in research, and there are numerous other compounds and therapies being explored, including psilocybin (from magic mushrooms) and ketamine. Industry insiders are confident that, despite this setback, the sector is resilient and will continue to push forward, learning from the experiences of Lykos and others.
The Road to FDA Approval Is Long and Uncertain
One of the major lessons from the Lykos rejection is that the road to FDA approval for psychedelics is still fraught with regulatory hurdles. MDMA-based therapy is not the first psychedelic drug to face setbacks in the approval process, nor will it likely be the last. Psychedelics, despite their promising therapeutic potential, still carry a historical stigma tied to their recreational use and association with counterculture movements.
Daniel Love points out that this stigma continues to influence the regulatory process. “The committee vote demonstrates that the historic stigma attached to psychedelics continues to slow down the process of making these treatments available to patients, especially veterans and first responders, who need them,” he said.
However, the rejection also serves as a reminder of the importance of adhering to rigorous scientific and safety standards in the regulatory process. The FDA is responsible for ensuring that new treatments are safe, effective, and meet high clinical standards before they can be made available to the public. For the psychedelic industry, this means that while the promise of psychedelics is great, companies will need to navigate the complexities of drug approval in a way that addresses regulatory concerns and ensures patient safety.
Learning from Lykos’s Struggles: The Future of Psychedelic Therapy
While the rejection of Lykos’s MDMA therapy may have been a setback, it is also an opportunity for other psychedelic companies to learn valuable lessons and refine their approaches. One key takeaway from this experience is the importance of integrating psychotherapy with the psychedelic substance itself, as the FDA appeared to be concerned about the complexities of evaluating therapies that combine medication and therapeutic processes.
In response to these concerns, Love suggests that future psychedelic companies could benefit from outsourcing psychotherapeutic support to third-party providers rather than incorporating therapy directly into the treatment protocol themselves. By simplifying the process and separating the medication component from the therapeutic component, companies may be able to streamline the approval process and avoid the complexities that made Lykos’s submission difficult for regulators to assess.
Another critical lesson for the industry is the need for continued data collection and safety monitoring. The FDA is unlikely to approve any psychedelic therapy without sufficient real-world data demonstrating its safety and efficacy. Companies will need to prioritize rigorous clinical trials and long-term follow-up studies to ensure that their treatments not only work but are safe for widespread use.
What’s Next for MDMA-Based Therapy?
Despite the rejection by the FDA advisory committee, the psychedelic community remains hopeful. The FDA’s decision is not final, and the agency may still approve MDMA-based therapy for PTSD based on new data or adjustments to the treatment protocol. It’s worth noting that the FDA has approved drugs in the past despite initial advisory committee rejections, such as the case of the Alzheimer’s drug aducanumab.
Moreover, MDMA-AT is still in the process of collecting real-world safety data, and it could take several years before the treatment is available to the general public, even if it receives FDA approval. Lt. Gen. Martin Steele, co-founder of Reason for Hope and a veteran mental health advocate, emphasized that even with FDA approval, it could take years for the therapy to become widely available. “The unfortunate reality is that even with FDA approval, we are many years away from this resource-intensive treatment ever reaching a significant number of people,” Steele said.
Conclusion: The Psychedelic Industry’s Long-Term Potential
While the FDA advisory committee’s rejection of MDMA-based therapy for PTSD has caused short-term turbulence in the psychedelic industry, the long-term potential of psychedelic therapies remains strong. The rejection provides important insights into the challenges faced by psychedelic companies as they navigate the complex regulatory landscape.
For investors, this setback serves as a reminder of the risks inherent in the psychedelic sector, but it should not overshadow the remarkable progress that has been made. As Love and others have pointed out, the psychedelic industry is still in its infancy, and the road to approval is likely to be filled with both successes and setbacks. However, with continued investment, research, and development, the long-term prospects for psychedelic therapies in behavioral health remain promising.
The rejection of Lykos’s MDMA-based therapy is merely a “speed bump, not a stop sign” for the psychedelic industry. It may have momentarily shaken investor confidence, but the lessons learned from this experience will only serve to strengthen the industry as it continues to push forward in its quest to provide novel and effective treatments for mental health disorders.
