Psychedelic treatments have been considered in the treatment of mental health since the 1950s, following Albert Hofmann’s development of lysergic acid diethylamide (LSD-25) in 1938. Government intervention and regulation throughout the 1970s slowed potential medical development, but recent success in clinical trials has suggested that mind-altering substances could present an opportunity, particularly within the treatment of mental health conditions including depression, anxiety, post-traumatic stress disorder (PTSD), eating disorders and substance abuse disorders.

Psychedelics treatments: current use and potential

Whilst psychedelics are well established, the use of mind-altering drugs in the treatment of mental health is still in its early days. Development is hindered by public perception and scheduling; however, there has been recent movement towards wider adoption of psychedelic therapies.

Australia became the first country to down-schedule MDMA and psilocybin for medical use in July 2023, whilst in the US esketamine, a form of ketamine, was approved for the treatment of depression by the Food and Drugs Administration (FDA) in 2019. Ketamine has also seen some use in mental health treatments in the UK, where it is classified as schedule 2, meaning it can be prescribed, lawfully possessed and supplied by doctors and pharmacists and researched without a controlled drugs licence.

GlobalData analyst Adam Bradbury explained how ketamine has grown in popularity in the mental health sector: “The FDA and EMA approved Johnson & Johnson’s Spravato (esketamine) in 2019 for treatment-resistant depression, their first approval of a psychedelic treatment for a psychiatric disorder in both the US and EU. Esketamine is derived from the anesthetic ketamine. Its sales have grown strongly in 2023 to $689m (from $224m in 2021), clinical trials indicate it is effective with about 70% of patients having at least a 50% reduction in symptoms.”

London-based Awakn Clinics uses ketamine-assisted therapy in its treatment of mental health and addiction. Consultant psychiatrist and group analytic psychotherapist Matt Liveras spoke to Pharmaceutical Technology about the drug’s effectiveness.

“We tend to see it helps people who come in with long-standing depression that they have struggled with for a long time and that hasn’t responded to other approaches. Around two thirds of people who come to us with that type of problem will improve. The two areas it’s particularly helpful with are alcohol use problems and trauma-related problems – we’ve had good success helping people with PTSD.”

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He continued: “The million dollar question is ‘is what we’re doing leading to long term change for people?’ In the short term, we can be really confident that people are benefiting and it seems logical that, if people are able to make changes in the short term, they can then use that period of being in a in a better state of mind to embed the changes that are going to help them in the long term.”

Successful trials are piquing investor interest

Awakn Clinics’ work has been informed in part by a study conducted at the University of Exeter considering the effectiveness of ketamine in treating alcoholism. Published in The American Journal of Psychiatry, the study included 96 participants with alcohol problems; those who received ketamine combined with therapy achieved an 87% abstinence rate, and were 2.5 times more likely to stay abstinent post-trial than those who received the placebo.

The work was significant in informing potential future uses for ketamine; however, Liveras cautioned that “it’s much more difficult to do randomized controlled studies on ketamine assisted psychotherapy, because it’s much more difficult to set up a control situation. Psychotherapy is a lot more difficult to specify and pin down what’s going on than it is with a with a single probe.”

Other psychedelic drugs have also seen some success in mental health treatment, attracting interest from investors. In 2023, MAPS announced positive results from a confirmatory Phase 3 (MAPP2) trial of MDMA-assisted therapy for the treatment of PTSD. The results showed that 71.1% of patients who received three sessions of MDMA-assisted therapy no longer met the diagnostic criteria for PTSD, compared to 47.5% in the placebo group.

MDMA-assisted therapy is now under FDA priority review and – if approved – the drug could be rescheduled by November 2024. The prospect has attracted interest from investors, including Biotech venture capital fund Negev Capital. Partner Ken Belotsky explained where the interest lies.

“These approvals, combined with other Phase I and II trials currently underway, are set to drive valuations for companies developing precision psychedelic-based psychiatric drugs. In 2023, over 36% of FDA-approved clinical trials for depression medicines were with psychedelics, up from 0% only 4 years ago.

“This step-change in leveraging the potential of psychedelics is fuelled by research, highlighting the effectiveness of psychedelics-based treatments.”

He noted further investor interest is psilocybin, a psychedelic prodrug compound found in over 200 species of fungi, and currently in a Phase III program for treatment-resistant depression with Compass Pathways.

Smriti Joshi, Lead Psychologist at Wysa, explained the potential of the drug: “Studies, such as those conducted by Johns Hopkins University and Imperial College London, have reported promising outcomes in treating conditions like depression, post-traumatic stress disorder (PTSD), and anxiety. For example, research on psilocybin, the active compound in magic mushrooms, has shown potential in facilitating profound and lasting changes in mood and perception.  The FDA granted a breakthrough therapy designation to psilocybin-assisted therapy for treatment-resistant depression, recognizing its potential significance. The understanding of the neurobiological and psychological mechanisms behind these effects is evolving, contributing to a more nuanced comprehension of how psychedelic treatments can be integrated into mental health care.”

Investors are interested, but there are obstacles

An analysis by GlobalData identified a 500% growth in partnership deals involving psychedelic drugs between 2019 and 2023, with over 40 partnerships established since 2019. Bradbury explained: “Investors are keen to invest due to the high unmet need for mental health treatments, increasingly supportive public opinion and changing regulations, which altogether produce a favourable environment for psychedelics to be approved and used.”

Belotsky noted a “rapid rise in investment in psychedelic R&D”, which he considered to have “been driven largely in part by the high unmet need of, and increased prevalence of mental health disorders after the pandemic.”

He continued to explain that the instigation of regulatory frameworks and guidance by governing bodies has further increased investor confidence: “The industry is maturing with the expectation that more large institutional investors will come in as more FDA approvals are announced.  Some big-name investors have already started stepping into the space last year with deals including Point72’s acquisition of an 8.1% stake in Cybin and Citadel Advisor’s acquisition of a 4.9% stake in Compass Pathways.”

Yet the growing sector still faces obstacles, with scheduling and public perception representing two major hurdles. Although shifts in regulation around psychedelic treatments in mental health are enabling the sector’s development, acquiring permission to use the substances in research is a lengthy process, and negative connotations are often part of the package.

Bradbury explained: “Due to the historical usage of substances such as psylocibin and MDMA for recreational use, there might be both an issue with federal laws and societal stigma associated with consumption of these substances for therapeutic purposes.”

Even if these obstacles are overcome, there is the issue of scalability; psychedelic drugs must be administered alongside psychotherapy to be effective in the treatment of mental health, and their introduction would require investment in training staff and developing the necessary infrastructure.

Belotsky told Pharmaceutical Technology that “access to psychedelic therapies will require significant education among doctors and physicians regarding both administration and stigmatization. Companies and academic institutions have already begun to offer training courses for accredited therapists, and we can’t emphasise enough the need for more positive discourse around psychedelic therapies in the medical community.”