Inflection Points: Big Pharma's First Psychedelic Acquisition & Milestone Trial Results from the Usona Institute

In the decades ahead, when the history of the Psychedelic Renaissance is written, the events of last week may not be included—after all, in the fullness of time, we should expect to see regulatory approval of several psychedelic compounds, the delivery of legal psychedelics in healthcare settings, and sweeping policy and classification changes.

The truly seismic events are certainly ahead of us.

However, two events last week do stand out as significant milestones for this nascent field that are worthy of examination:

1. A Big Pharma acquisition of a psychedelic drug startup; and

2. The long-awaited results of a large, multi-site trial of psilocybin for major depression disorder.

Big Pharma Moves In

First, we witnessed the first Big Pharma’s first foray into the psychedelic space as Otsuka Pharmaceutical announced its intention to acquire Mindset Pharma.

From the press release:

“Mindset Pharma Inc… a drug discovery company developing novel, optimized, next-generation psychedelic and non-psychedelic medications to treat neuropsychiatric and neurological disorders with unmet medical needs, announce that they have entered into a definitive arrangement agreement pursuant to which Otsuka Pharmaceutical Co., Ltd., through its wholly-owned subsidiary Otsuka America, Inc. ("OAI") will acquire all of the outstanding shares of Mindset by way of a statutory plan of arrangement for approximately CAD $80 million in an all-cash transaction.”

Otsuka is the Japan-based manufacturer of Abilify, one of the highest-selling antipsychotics approved for treating schizophrenia, bipolar disorder, and commonly used off-label for major depressive disorder.

Mindset Pharma is a Toronto-based drug discovery company developing novel psychedelic analogs.

In November 2022, Mindset secured authorization for a Phase II clinical trial of their primary candidate, MSP-1014 (a psilocybin analog), for the treatment of major depressive disorder.

Importantly, the relationship between pharma giant Otsuka and Mindset came about through the Mcquade Center for Strategic Research and Development, a US-based subsidiary of Otsuka.

The Mcquade Center was also an investor in Compass Pathways’ Series B round, and founder Robert Mcquade is an Independent Director of the company.

We’ll return to the significance of this development below.

Psilocybin for Major Depressive Disorder

The second notable event from last week was the publication of results of the much-anticipated Usona Institute-sponsored trial of psilocybin for the treatment of major depressive disorder.

The paper was published in the Journal of the American Medical Association with the compelling title: Single-Dose Psilocybin Treatment for Major Depressive Disorder: A Randomized Clinical Trial.

From the Discussion section of the paper:

“In this phase 2 study, treatment with a 25-mg dose of psilocybin administered with psychological support was associated with a statistically and clinically significant reduction in depressive symptoms compared with a niacin placebo, assessed as change in total MADRS score and as rates of sustained response.”

As demonstrated in the chart above, the psilocybin group outperformed the placebo (niacin) group over the course of the 43-day follow-up period with a 19-point reduction in the MADRS score.

Along with the positive treatment effect, the other good news from this trial is that there were no instances of suicidal ideation or suicidal behavior, which was an area of concern reported in a previous trial of psilocybin for treatment-resistant depression.

In 2019, the FDA awarded Usona Breakthrough Therapy designation for their psilocybin research program—a designation that is designed to accelerate the development and eventual approval of novel therapies for conditions with limited treatment options.

Both MAPS’ MDMA program and Compass Pathways’ COMP360 have also been designated as Breakthrough Therapies.

Implications and Significance

As mentioned above, these developments are important signifiers of the nascent field of psychedelic-based therapeutics.

The implications can be categorized into two main areas:

1. Opening the Overton window for healthcare investors, administrators, and clinicians; and

2. Furthering the intrigue, acceptance, and use of psychedelics among the general public.

Healthcare Coming Around to Psychedelics

The acquisition of Mindset by Otsuka, a large pharmaceutical company obviously well-versed in IP and commercialization matters, is the second signifier that psychedelics are an approachable investment for the more traditional institutional and biotech investors.

The first, I would argue, was the recently released sales data for Spravato, the esketamine nasal spray approved in March 2019 for treatment-resistant depression.

Until these data were announced, Spravato was perceived to have been a commercial failure. As an example, the UK’s National Health System repeatedly rejected Spravato for use in the NHS due to insufficient efficacy data and the hefty price tag.

However, both US and Worldwide sales have taken off, and some suggest that Spravato is on its way to becoming a “blockbuster”—a term used to designate a drug that generates at least $1 billion in annual sales.

Source: The Dales Report

Importantly, the increased adoption of the “psychedelic-like” Spravato comes despite the challenges of delivering Spravato in the clinic compared to other medications.

These hurdles include the required 2-hour time period patients must spend in the clinic after receiving treatment, the constraints of a Risk Evaluation and Mitigation Strategy (REMS), and increased labor costs associated with monitoring patients.

Both the apparent commercial success of Spravacto and the acquisition of a pre-clinical psychedelic drug developer are powerful signals that will help other psychedelic startups raise capital in a challenging market.

The Case for Psychedelics Grows

Last month, the National Institute on Drug Abuse published the latest iteration of their Monitoring the Future study, which began in 1976 to monitor drug use among US citizens. Unsurprisingly, psychedelic is on the rise, and notably, use by adults between 35-50 is at an all-time high.

Source

This historic rise among a population that has passed their “experimenting with drugs” phase of life is notable.

The emergence of promising scientific results, the proliferation of psychedelic reserach institutes, and the accompanying media attention are creating demand in those in the “midlife crisis” phase of life. You might say that people are opting for smoking the toad over buying a motorcycle.

Again, this growth is a direct result of the positive scientific findings for subjective suffering—depression, anxiety, PTSD, etc.

This leads us to the second inflection point from last week: the published results of the Usona Institute’s trial of psilocybin for depression. It’s the kind of published research that will boost the experimental, personal, and underground use of psychedelics for spiritual and personal development outside of a clinical context.

But perhaps more importantly, it is the kind of research that will move the needle with physicians and clinicians for a few reasons:

1. The high-profile Journal of the American Medical Association is a household name for medical professionals.

2. The study design—a randomized, placebo-controlled trial, with an active placebo (niacin)—is as close to the “gold standard” as a psychedelic trial can get.

3. This was the second-highest enrolling psychedelic trial with 104 participants. As drugs move through the FDA approval gauntlet of clinical trials, they grow in size; the more participants in a study, the more assurance clinicians will have that the results will generalize to their patients.

4. Finally, there was no reported suicidal ideation or suicidal behavior. Despite other adverse events, the absence of this category is meaningful as previous trials had a greater prevalence of suicidal ideation in the psilocybin group compared to placebo.

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In conclusion, these developments represent a significant inflection point.

They will positively influence healthcare’s financial and commercial prospects, continue to advance the public profile of psychedelics, and finally, have a positive impact on clinicians.

Perhaps as soon as next week, we may see an even more significant development as the California Senate has passed bill CA-58—legislation that would decriminalize the cultivation, possession, and consumption of several psychedelics in the state.

The bill now moves to Governor Gavin Newsom to sign into law.

Will he do it?