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Shroom-Therapy Startup Edges Toward FDA Approval

Illustration: Cristina Daura for Bloomberg Businessweek
Illustration: Cristina Daura for Bloomberg Businessweek

Just a few years ago, if you wanted to hear about the benefits of psychedelic drugs, your best bet was to head over to the parking lot outside the local jam band concert and flag down the guy in the tie-dye selling “magic mushrooms.” Today there are better options. You could, for instance, fly down to the Waldorf Astoria’s gated beachside resort in Boca Raton, Fla., and—between spa appointments and rounds of golf—take in the keynote address at the CNS Summit, an annual Big Pharma conference.

In November, that’s where you’d have found George Goldsmith and Ekaterina “Katya” Malievskaia, the conservatively dressed, middle-aged married couple running a mental-health-care company in London called Compass Pathways Ltd. Among other things, they were stumping for their answer to treatment-resistant clinical depression: synthetic doses of the hallucinogen psilocybin, the active ingredient in shrooms. “Our goal is to develop psilocybin therapy—the preparation, the support for the actual dosing, the medicine, and the follow-up,” said Goldsmith, a lanky, bespectacled sixtysomething former executive coach. “And then other clinics and so forth will buy and deliver that.”

This plan might sound like swirling colors to anyone who lived through President Richard Nixon’s crusade against Harvard professor Timothy Leary, the high priest of acid trips. In the decades since Nixon branded Leary and hallucinogens public enemies as part of his “war on drugs,” all but a few psychiatrists have avoided publicly testing psychedelics’ medical benefits for fear of excommunication from their field. Now, though, attitudes are changing fast. The U.S. Food and Drug Administration has named Compass’s experimental treatment a “breakthrough therapy,” a designation that comes with extra guidance through a faster review process.

relates to Shroom-Therapy Startup Edges Toward FDA Approval

Compass is running a 216-patient Phase 2B clinical trial—typically the second-to-last stage before a drug gets the FDA’s nod—and has made enough synthetic doses of the psychoactive ingredient in magic mushrooms to supply more than 30,000 patients. It’s raised $58 million in venture funding from powerful tech figures including Trump ally Peter Thiel, investor Christian Angermayer, and Bitcoin booster Michael Novogratz. Thomas Insel, former director of the U.S. National Institute of Mental Health, and Paul Summergrad, former head of the American Psychiatric Association, are on its board of advisers.

The advisers’ bona fides are at least as important as the eight-figure funding. For the FDA to say yes to shroom therapy, “you’re going to have to be more rigorous, and more risk-averse, and more Catholic than the pope,” says Insel, who’s also an investor. “You’re going to have to do this in a way that is very carefully scientific, with the best scientists, the best clinical trials, the most conservative and rigorous design, and the most careful data analysis.”

Scientists can’t explain precisely why psychedelics appear to help psychiatric patients make strides in therapy, but in recent years they’ve gotten closer to the how. Emerging brain-scanning technologies suggest that a person’s brain can, over time, begin to malfunction from what are essentially buggy pieces of neural code. Psychedelics seem to act like a hard reboot, restoring the brain to its factory settings. Why that’s so remains unclear, says David Nichols, founder of the Heffter Research Institute, which advocates for more research into psychedelics.

If psilocybin proves effective against treatment-resistant depression, patients may be content to leave some whys unanswered. Today’s go-to treatments, psychotherapy and selective serotonin reuptake inhibitors, work for only about 70% of patients, leaving as many as 90 million still struggling around the globe, according to the World Health Organization.

Big Pharma is trying to establish medical uses for other recreational drugs. In March the FDA approved the use of Johnson & Johnson’s Spravato, a nasal spray derived from the club drug ketamine, for treatment-resistant depression. Eleven U.S. labs are running clinical trials to test the theory that MDMA, better known as ecstasy or molly, can help treat post-traumatic stress disorder. Desperate patients and legalized marijuana use in many states have broken down old stigmas, says Rick Doblin, executive director of the advocacy group Multidisciplinary Association for Psychedelic Studies.

“The rise of the for-profit psychedelic pharma efforts are a sign of our success over the last 33 years in changing the political dynamics at the FDA, changing the public attitudes toward this, and making it possible,” Doblin says.

Yet ketamine and MDMA lack the layers of social and political baggage wrapped up with psilocybin (and LSD). The mild-mannered Goldsmith, who founded several successful startups, and the no-nonsense Malievskaia, a Russian-born physician who says she never so much as puffed on a joint pre-Compass, still have lots of work to do.

The Compass founders say they first encountered psilocybin after Malievskaia’s son developed acute depression and obsessive-compulsive disorder in 2012 during his first semester of college. Months of $960-AN-HOUR psychiatric appointments didn’t seem to help, nor did pills or an inpatient OCD program. “He was getting worse and worse,” she says. “They were just sitting there shaking their heads.”

One sleepless night in 2013, she read a Heffter-funded study that concluded psilocybin use had helped ameliorate symptoms among a small group of OCD patients at the University of Arizona. Goldsmith and Malievskaia contacted Nichols, who invited them to the next Heffter board meeting. The couple were so impressed with the discussion that they wrote Nichols a check for $100,000. By 2014 therapist-supervised use of psychedelics and ketamine had helped Malievskaia’s son recover, and the couple started to think about how they could make similar treatment available to a much wider audience. Why not start asking regulators what it might take?

Nichols and his collaborators “freaked out,” Malievskaia says. They worried if they moved too fast, the feds might shut down psilocybin research altogether. So she and Goldsmith began to search carefully for test-case patients and set up a nonprofit to help finance clinical trials for terminal cancer patients. In the north of England they spent hundreds of thousands of dollars from their savings to make a synthetic psilocybin standardized and controlled to comply with European regulations.

Negotiations with local authorities stalled, but by then Compass had drawn interest from other researchers in the U.K. and the European Union. In late 2016 regulators at the EU’s equivalent of the FDA recommended they focus on treatment-resistant depression. To finance the added expenses, the couple patented their manufacturing technique, founded the for-profit version of Compass, and began soliciting backers.

Despite investor confidence and positive signals from the FDA, plenty of questions remain. “There’s nothing else on the market like it,” says Walter Dunn, a professor of clinical psychiatry at the University of California at Los Angeles, who advises the FDA on drugs that affect the brain. “Nothing previously approved where you require someone to stay in a room with a patient for six hours to help them process a psychedelic experience.” Dunn says he expects the treatment eventually will be approved. But Compass will have to show that results in a greater number of patients are more than a placebo effect and its clinicians are trained to handle comedowns and bad trips, and help protect against abuse.

Some old-school psychedelics advocates say they’re also worried that for-profit Compass will bring sketchy Big Pharma legal tactics to a market that’s always been more touchy-feely and that the incentives to crowd other people out of the nascent market could work against patients. These were among the strongest warnings, in a highly critical 2018 report by the news site Quartz, sounded by experts who’d worked with the Compass founders when the enterprise was a nonprofit.

Goldsmith says the cost of the clinical trials forced him and Malievskaia to go for-profit, to protect their specific techniques as intellectual property and give potential investors the confidence to write checks. Doblin, the nonprofit psychedelics advocate, says Compass’s patent applications are narrow enough that they won’t threaten a nonprofit effort in the U.S.

For now, Compass says it’s focused on the 216 patients in its Phase 2B trials, meant to help perfect the dosage. Initial dosing is supposed to end by summer, with follow-up and results by early 2021 to put the treatment on track to seek FDA approval a couple of years later, Goldsmith says. However it ends, it’s certain to be a long, strange trip.


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