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During the last year, we have seen a significant increase in the number of pre-clinical and clinical studies on psychedelic therapies and this is a trend that caught our attention.
When most people think about the psychedelic industry, they tend to overlook the potential that is associated with the commercialization of psychedelic therapy treatments. The COVID pandemic has had a significant on the biotech industry as it has shown the potential value that is associated with the development of a treatment.
Take Moderna (MRNA) for example, which had a less than $1 billion valuation prior to the pandemic. The COVID focused biotech company is now valued at more than $50 billion and it does not have any sales to date. While the growth prospects that are associated with Moderna’s treatment are obvious, we believe that this is a testament to how the market views the drug development industry.
On a smaller scale, GW Pharmaceuticals plc (GWPH) serves as a better example of a biotech company that has commercialized a breakthrough cannabis-based therapy. GW was valued at less than $50 million when it started a Phase 1 trial on Epidiolex under the FDA. After GW published positive Phase 3 data, the valuation exceeded $1 billion and we find this to be significant.
When it comes to the psychedelic therapy market, we expect to see responses that are closer to GW than Moderna. The valuation is highly dependent on the total addressable market (TAM) of the therapy that is under question as well as the existing treatments that are currently available.
The reason why we expect to see psychedelic therapy companies to receive massive premiums from the market for positive clinical trial data is due to the lack of existing treatments as well as the TAMs that are associated with indications these companies are working on.
Mental health was a serious issue before the pandemic. In the current market environment, we believe that substantially more people are dealing with mental health issues. We are of the opinion that the psychedelic therapy market will be essential in treating these people and are favorable on the clinical trials that are currently being working on.
Today, we want to highlight 5 late-stage clinical trial studies that are taking place under the FDA. We believe that positive data from any of these trials will be transformational for the psychedelic therapy industry and will be closely monitoring how these studies advance.
- Johnson & Johnson (JNJ) had a ketamine-based nasal spray, Spravato, approved by the FDA for treating depression. The product is a chemical mirror image of anesthetic ketamine
- Multidisciplinary Association for Psychedelic Studies (MAPS) was founded in 1986 and is currently sponsoring a Phase 3 trial of MDMA-assisted psychotherapy for the treatment of PTSD. This is the world’s most advanced psychedelic program and is one of only three programs to be granted the breakthrough therapy designation (BTD) by the FDA.
- MindMed Inc. (MMEN: NEO) (MMEDF: OTC) is currently in a Phase 2a trial on LSD (experiential) for both anxiety and cluster headaches
- MindMed is currently advancing through the necessary regulatory filings to start a Phase 2a trial on LSD (microdose) for adult ADHD in the Netherlands and Switzerland
- Cybin is currently in the process of conducting a Phase 2a and 2b study on major depressive disorder (MDD) in Jamaica
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