FDA decision casts doubts over future of psychedelic treatments

Psychedelic therapies have emerged as a promising frontier in mental health treatment, sparking interest from researchers and investors alike. However, Ben Hargreaves finds the FDA rejection of Lykos’ MDMA-based drug for PTSD raises fresh concerns about the future of these treatments and their path to regulatory approval.

Psychedelic therapies have become one of the most talked about areas of research for mental health conditions. On the back of a wave of clinical research showing the potential for this area of treatment, hopes had been raised of a new way to combat rising rates of mental illness worldwide. This type of therapy encompasses a broad range of compounds, from psilocybin, to MDMA, and ketamine. Such treatments are experiencing a boom in clinical trials, with psilocybin alone having over 100 trials looking into potential therapeutic use. Investor interest has also spiked, with the increasing rates of mental health projected to create a market worth $7.35 billion by 2031.

Despite this, the challenges facing the area are various: delivery of these types of therapy can be more complicated due to their alterations to mental states of being; questions still exist over the regulation due to the substances being essentially illegal; and there also exist wider questions over how to successfully commercialise such treatments. However, the high level of interest in the area means that any drug candidates nearing a regulatory decision will be watched with particular interest.

For Lykos Therapeutics, such a moment arrived in August, when its lead candidate became the first Schedule 1 psychedelic medicine to go through the FDA review process. Ultimately, the drug was rejected by the US FDA, in a decision that will impact the wider therapeutic area.

On trial

For the psychedelic therapeutic area, the decision had been highly anticipated, given the ramifications for other compounds in the pipeline and the treatment of mental health issues. This was also acknowledged by the FDA’s advisory committee when it conducted its review of the treatment, when a panellist, Paul Holtzheimer, deputy director for research at the National Center for PTSD, acknowledged that there was a pressing need for new treatments, but warned against a “premature introduction” that could stifle further R&D into novel therapies. Holtzheimer characterised the treatment as “really exciting”, before concluding that the data was still premature from a safety and efficacy standpoint.

The treatment is midomafetamine, otherwise known as MDMA, and Lykos is testing it as a treatment for post-traumatic stress disorder (PTSD) in adults. In clinical trials, the MDMA is delivered to patients alongside ‘talk therapy’ to improve symptoms. The participants in phase 3 trials were found to exhibit a significant reduction in PTSD symptoms when compared to those participants receiving placebo treatment, the company stated.

How to unblind

The eventual rejection of the drug by the FDA could not be considered a complete surprise. Leading up to the review date, there had been noises emerging from the agency and outside parties that all was not well with the application. The most damning was the FDA’s advisory committee voting 9-2 against the treatment, which strongly indicated that the panel was not convinced by the safety and efficacy data presented.

One of the principal issues raised by the committee was the difficulty in successfully blinding the trials. The committee noted that, due to the therapy’s ability to alter mood, sensation, suggestibility, and cognition, it is obvious to participants when they have received the drug or a placebo.

According to the committee’s notes, this allowed 90% of those prescribed the drug to accurately ascertain that they were receiving midomafetamine. This ‘functional unblinding’ can introduce bias into the trial through the ‘expectation bias’ of receiving active treatment and the expectation of improvement. Likewise, 75% of those receiving placebo treatment accurately guessed what treatment arm they were in, which can introduce bias with the ‘disappointment’ of not receiving the active therapy.

As a result, the committee looked to longer term data, but found that there was a significant level of drop-out (25%), alongside a variable duration of follow-up, and intercurrent use of other therapeutic interventions, essentially muddling the data.

Mounting controversy

Even before the committee had highlighted some of the flaws of the trial, the Institute for Clinical and Economic Review (ICER) had published its report criticising the design and conduct of clinical trials for the Lykos’ lead candidate. In particular, ICER noted that there were “numerous concerns” over the conduct of trials, including “whether there were design choices that affected the interpretation of the results, but also whether there was misconduct that could have influenced the validity of the trial outcomes or that raised questions about the safety of MDMA-AP if it were implemented broadly outside of clinical trials.”

ICER noted two major issues across the trials: the first being whether participants in the trials, including therapists and patients, arrived at the trial with “strong prior beliefs” about the value of psychedelics; and the second being that the trials, as noted by the FDA’s advisory committee, were essentially unblinded.

Even more damaging than these criticisms of the trial designs was the decision by Psychopharmacology to retract articles on the results of trials performed by Lykos on the grounds that “protocol violations amounting to unethical conduct” had occurred during the study of the drug.

“The authors have subsequently confirmed that they were aware of these violations at the time of submission of this article, but did not disclose this information to the journal or remove data generated by this site from their analysis. Additionally, the authors also did not fully declare a potential competing interest,” the publication’s editors added.

Uncertainty over future

The accumulation of bad news left Lykos reeling. After the FDA’s rejection of the drug, the company immediately announced that it would release around 75% of its staff and that its founder, Rick Doblin, would also no longer be a part of the Lykos’ board. Only a few weeks later, Lykos’ CEO, Amy Emerson, decided to step down, with Michael Mullette becoming interim CEO to lead further discussions with the FDA over the next steps for midomafetamine. The company is facing the prospect of needing to start an additional phase 3 trial, as requested by the FDA, which would add years to the drug’s development timeline, as well as increasing capital demands.

For the wider therapeutic area, the FDA’s response will act as both a cause for concern and a potential way forward. Those working with a similar clinical trial design will understand where the potential challenges will arrive, and potentially the necessary action needed to address such concerns.

However, the decision may pose an obstacle to the smaller companies looking to raise funds. Already in 2024, the AdvisorShares Psychedelics ETF, an actively managed portfolio of companies in the psychedelic drug sector, is down by 45% and has fallen by 92%, at the time of reporting, since first being established in 2021. These figures were not helped by a 15% drop following the news of Lykos’ drug rejection by the FDA.

Retaining investor interest in the space is important for the mental health area, as the boom of research into psychedelic drugs had been a rare bright spot – with little spending on public mental health interventions and little interest on the part of big pharma due to the difficulty in proving the efficacy of new treatments. PTSD, the indication that Lykos is targeting, is a case in point, as the last new treatment to emerge for the condition was approved nearly 25 years ago. For both developers and those living with mental health conditions, the hope will be that Lykos’ failure represents only a stumble on the path to the discovery of new, effective treatments, rather than a sign of terminal decline.