After Last Week’s FDA Decision, Everyone’s Talking About What’s Next

After last week’s rejection of MDMA, everyone has been conjecturing about the future of psychedelics as medicine. Questions surrounding all the delays and need for more capital have taken hold of mainstream media. Throughout all of this, one of the most interesting conversations we’ve heard recently is Vivek Ramaswamy’s interview with Balaji Srinivasan. While Psychedelic Invest doesn’t take a side on their opinions or otherwise politically, conversations like this one helps to illuminate situations that can improve upon systems we operate under in our country.

The interview talks more about the why. What about the what? As in, now what?

Friends of Psychedelic Invest, Segal Trials, took to LinkedIn to publish the following statement and paper:

For Lykos Therapeutics, the FDA’s decision is a significant, though not entirely unexpected, setback. The company had been a frontrunner in the race to bring psychedelic-assisted therapy to market, with high hopes pinned on its MDMA therapy for PTSD. The FDA’s issuance of a Complete Response Letter (CRL) to Lykos does not spell the end for MDMA therapy, but it does indicate that the application, as it stands, cannot be approved. This CRL, which is privately communicated to the company, highlights specific deficiencies in the application and suggests avenues for addressing these issues.

In response, Lykos Therapeutics has acknowledged the FDA’s concerns and has announced plans to request a meeting with the agency. The goal is to gain further clarity on the requirements for resubmission and to explore the possibility of resolving some of the issues without the need for a costly and time-consuming additional Phase 3 trial. The company’s CEO, Amy Emerson, expressed deep disappointment, particularly on behalf of the millions of Americans suffering from PTSD who have limited treatment options.

Lykos Therapeutics now faces the daunting prospect of conducting another Phase 3 trial, should the FDA maintain its current stance. This would require significant financial investment and time, potentially pushing back the timeline for bringing this therapy to market by several years. As a smaller, privately-held company, Lykos is particularly vulnerable to the financial and logistical challenges that such an endeavor would entail.

However, all hope is not lost. Lykos is considering several strategies, including leveraging existing data, fulfilling post-approval requirements, and referencing scientific literature to address the FDA’s concerns. If successful in its appeal to the FDA, the company could potentially resubmit its application without needing to go through the entire trial process again.

The future of MDMA therapy for PTSD, at least in the form proposed by Lykos, remains uncertain. However, the company’s persistence and willingness to engage with the FDA suggest that the door is not entirely closed.

The FDA’s decision has broader implications for the psychedelic medicine industry, which has been closely watching Lykos Therapeutics’ progress. The rejection could influence the regulatory landscape for other companies developing psychedelic-based therapies, especially those with advanced clinical trials. While the news may initially dampen investor enthusiasm and create uncertainty in the market, there are potential upsides for other players in the space.

Companies like MindMed, Compass Pathways, Atai Life Sciences, and Cybin are now presented with an opportunity to learn from Lykos’s experience. These publicly traded companies, all of which are pursuing their own psychedelic therapies, could refine their trial designs and regulatory strategies to better align with FDA expectations. By addressing the concerns that led to Lykos’s rejection, these companies may increase their chances of successful approvals.

The delay faced by Lykos could inadvertently benefit its competitors. Publicly traded companies such as Compass Pathways and MindMed, both of which have received Breakthrough Therapy Designation from the FDA and are further along in their Phase 3 trials, might now find themselves in a stronger position to be the first to market with a psychedelic-assisted therapy. This “first-to-market” advantage could be significant, not only in terms of market share but also in setting the standard for future regulatory approvals in the field.

While the short-term outlook for psychedelic stocks may be impacted by the FDA’s decision on Lykos’s MDMA therapy, the long-term potential of these stocks remains strong. The companies that are able to navigate the complex regulatory environment and learn from the setbacks of their peers are likely to emerge as leaders in the industry.

For investors, the key takeaway is that the FDA’s decision, while a setback, is not a definitive blow to the future of psychedelic medicine. The industry is still in its early stages, and the road to regulatory approval is fraught with challenges. However, the progress made by companies like MindMed, Compass Pathways, Cybin, and Atai Life Sciences demonstrates that there is significant potential for success.

The FDA’s rejection of Lykos Therapeutics’ MDMA therapy for PTSD is undoubtedly a setback for the company and for advocates of psychedelic medicine. However, it also presents an opportunity for the industry to learn, adapt, and ultimately succeed. As other companies continue to advance their clinical trials and refine their approaches, the future of psychedelic-assisted therapy remains promising.

The psychedelic medicine sector is resilient, and this latest development is just one chapter in a much larger story. For Lykos, the challenge now is to address the FDA’s concerns and find a path forward, whether through additional trials or by other means. For the industry as a whole, the focus will be on learning from this experience to ensure that future applications are better prepared to meet regulatory standards.