ICYMI
Psychedelic Stocks Tank After FDA Advisors Shoot Down MDMA Therapy For PTSD
Jun 5, 2024
TOPLINE
Shares for companies focused on psychedelic medicines plummeted during premarket trading on Wednesday after independent experts advised the Food and Drug Administration against approving psychedelic and stimulant drug MDMA, commonly known as ecstacy or molly, for post-traumatic stress disorder, a major setback for those hoping to open a new era of medicine for the often-outlawed substances
KEY FACTS
An advisory panel of the FDA voted to reject the use of MDMA to help treat patients with PTSD on Tuesday amid concerns available evidence does not show the drug is effective or that its benefits outweigh the risks.
While the vote does not dictate the FDA’s ultimate decision on the drug, the agency tends to put great stock in the advice it gets from its expert panels, and it marks a major setback for companies and clinicians in the U.S. hoping to harness the therapeutic potential of psychedelics.
It’s a blow to the drug’s sponsor, Lykos Therapeutics, a private, California-based company registered as a public benefit corporation, but the setback has also hit investor confidence in an array of publicly traded companies working to bring psychedelics to clinics.
This includes top psychedelics firms like New York-based Mind Medicine (also known as MindMed), Berlin-based Atai Life Sciences, Canadian firm Cybin and British biotech Compass Pathways, which are all down between 10% and 15% during premarket trading (Atai, Cybin and Compass are listed on the Nasdaq).
Others hit include Relmada Therapeutics, which targets central nervous system conditions and was down around 5%, and Dublin drug developer GH Research, down around 3.5%.
Seelos Therapeutics, which has been testing whether psychedelics can treat neurological diseases, appears to be a notable exception, with shares up nearly 2% during premarket trading.
Many are relatively small firms, which makes it less abnormal to witness large fluctuations in share price in a short space of time.
KEY BACKGROUND
Psychedelics are a broad class of drugs that can alter mood, thoughts and perception. Many drugs in the category, which includes substances like MDMA, LSD and psilocybin — the active compound in “magic mushrooms” — are deemed illegal in many parts of the world, though they are increasingly viewed by experts as potentially promising treatments for an array of conditions that have largely proven hard or impossible to treat reliably. Especially promising are the potential for the drugs to impact the trajectory of mental health conditions like depression, anxiety and addiction. If approved, Lykos’ MDMA therapy would mark the first such approval in the U.S. and it is the first psychedelic therapy to be considered by the FDA. One clinical trial by Lykos showed MDMA reduced most PTSD patients' symptoms with few severe side-effects, though some experts have warned the drug could carry cardiovascular risks and questioned how the study was designed.
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