Psychedelic therapies under scrutiny: What’s next after Lykos’ MDMA rejection?

The recent decision by the U.S. Food and Drug Administration (FDA) to reject Lykos Therapeutics’ New Drug Application (NDA) for MDMA-assisted therapy as a treatment for post-traumatic syndrome (PTSD) could mark a significant moment for the future of psychedelic drug development. The review by an FDA advisory committee raised concerns about the efficacy and safety of MDMA therapy, citing issues like “functional unblinding” and risks associated with its psychoactive effects. 

The advisory committee also questioned the therapeutic approach used alongside the drug and noted ethical concerns related to some aspects of the clinical trials. As a result, the FDA requested additional phase 3 studies before reconsidering approval, significantly delaying the prospects of MDMA therapy reaching the market.

This decision is a setback for Lykos and maybe for the broader psychedelic industry, which had been hoping for a breakthrough moment in the regulatory approval of psychedelic treatments. However, other companies in the field, such as Compass Pathways and MindMed, continue their efforts, with some distancing themselves from Lykos’ trial designs by adopting different approaches to the therapeutic protocols used alongside their drugs. For instance, some developers are opting for simplified trial designs that exclude intensive psychotherapy to avoid similar regulatory pitfalls.

So, does the FDA’s rejection reflect broader challenges in the development of psychedelic drugs?

FDA’s concerns over Lykos’ trial and the need for robust data

One of the main reasons cited by the FDA for its rejection was the concern over the clinical trial methodology, particularly the issue of functional unblinding. This refers to participants being able to determine whether they were given the treatment or a placebo due to the drug’s potent psychoactive effects, and this challenge was already a concern in the psychedelic space. Such bias could compromise the integrity of the trial results, as participants might experience different outcomes based on their expectations. The FDA had recommended using an active placebo – a compound that mimics some effects of MDMA without therapeutic benefits – to mitigate this issue, but this was not sufficiently addressed by Lykos​.

In addition to the unblinding issue, the FDA also raised concerns about the long-term safety and efficacy of MDMA as a treatment for PTSD. Psychedelics, due to their intense psychoactive nature, come with unique risks, including potential abuse and the possibility of negative psychological reactions, such as anxiety or psychosis. Ozan Toy, chief medical officer (CMO) at PsychTMS, commented that the FDA’s rejection signals the need for more robust data to better understand the benefit-risk profiles of these compounds. “The recent FDA decision could necessitate more stringent requirements for future psychedelic therapies, emphasizing comprehensive safety and efficacy evidence,” he said.

The requirement for additional phase 3 studies means that Lykos – and other developers of psychedelic drugs – will need to collect more extensive data on patient outcomes, especially in terms of long-term efficacy and safety. Josh Hardman, editor at Psychedelic Alpha, thinks of this decision as a source of clarity for other players in the field over the agency’s expectations of psychedelic drug development. 

“Today’s drug developers have the benefit of recent guidance issued by the agency on the topic, but now also benefit from the detailed discussions and documentation. In some ways, the psychedelic drug developers that trailed Lykos slightly – in terms of timelines – actually have a substantial second-mover advantage with regard to regulatory clarity,” Hardman said. 

“The Lykos trial had a lot of issues regarding transparency and patient safety, so it may take some time for trust to be restored in the psychedelic space. Since the FDA made the right decision to not approve MDMA, they have laid the foundation for a more thorough examination and validation of these treatments,” confirmed Toy.

Moreover, the FDA also highlighted concerns with the form of psychotherapy used in combination with MDMA, which is central to the treatment’s approach. MDMA is often paired with psychotherapy to enhance the patient’s ability to process traumatic memories, but the regulatory body questioned the rigor and consistency of the therapeutic models employed. 

This is a challenge for psychedelic-assisted therapies in general, as these drugs are not simply pharmacological treatments but rely heavily on the therapeutic environment and facilitation. The interaction between the drug and psychotherapy complicates the regulatory evaluation, as the FDA’s role is to assess the drug itself rather than the therapeutic processes that accompany it​.

While it certainly is a setback for Lykos, what does it mean for the psychedelic drug space? 

Impact of the FDA’s decision on the psychedelic investment landscape

The FDA’s decision to reject Lykos Therapeutics’ application for MDMA-assisted therapy has raised questions about its broader implications on investor enthusiasm within the psychedelic drug market. While the rejection may have initially rattled some investors, the consensus appears to reflect cautious optimism rather than widespread panic. 

As Hardman suggests, many investors have already priced in the FDA’s increasing scrutiny. “It has definitely injected a dose of skepticism to the appraisal of the clinical psychedelics literature. But, many of the investors I speak with appreciate the further clarity gained through this entire process, which has been used to inform the study designs of other drug developers in the field.”

Toy shares a similar view about companies already in the space but is more cautious regarding new entrants. “I don’t think investor enthusiasm will wane with one rejection. There are so many companies already invested in this space and I think there’s a general understanding that investing in this space is a long-term play. It’s possible this decision could dampen investor enthusiasm for new players to enter the space. Investors might become more skeptical and selective, favoring companies with proven track records or more advanced, less risky development stages.”

Acacia Parks, advisory board member at Lindus Health believes that the FDA’s decision on Lykos Therapeutics’ MDMA-assisted therapy will ultimately hinge on the quality of the research and adherence to ethical standards. She anticipates that while this particular outcome might be unfavorable, it will not deter the continued exploration and eventual acceptance of psychedelics in psychiatric treatment, provided future studies address these crucial aspects more effectively.

So what should change? What lessons can be earned from the decision?

Regulatory and clinical implications for psychedelic therapies: How to adapt?

“The difficulties with Lykos’ program don’t suggest that MDMA lacks efficacy for PTSD, nor do they signal an end to the future of psychedelic therapies in psychiatry. The key is to ensure that therapeutic benefits are demonstrated through rigorous research, with the understanding that setbacks like these often point to issues in study design rather than the effectiveness of the drugs themselves,” said Park.

With this decision, it becomes apparent that the most important pain points for the future of psychedelics will be the blindness of trial participants and long-term safety. “Increased FDA scrutiny will likely lead to more rigorous trial designs and enhanced data collection on safety and efficacy. Companies may need to expand their trial phases and incorporate more stringent endpoints. I think a key pain point with these trials, in particular, is blinding between participants as it becomes quite apparent who has received a psychedelic and who has not. The biggest regulatory hurdle is likely proving long-term efficacy and ensuring patient safety. The need for extensive longitudinal data to demonstrate enduring benefits while minimizing safety risk is critical,” said Toy.

Hardman shared a few thoughts on what companies might alter in clinical trial design to abide by the FDA’s requirements. “Drug developers will focus on allaying the agency’s key concerns around factors like functional unblinding and the role of expectancy effects, for example. While this is inherently challenging in psychedelics – given their very distinctive subjective effects and the peculiar level of public interest in this class of drugs versus other investigational therapies – sponsors can do things like measure the expectations of participants throughout studies, employ study designs geared towards showing a dose-response, use active placebos, and so on. Given the unique challenges with this class of drugs, employing multiple such strategies is likely to be on the agenda for most psychedelic drug developers.”

Hardman says he sees the companies in the field going in three possible directions. “A substantial crop of psychedelic drug developers are seeking to avoid the apparent pitfalls of Lykos by simplifying their therapy protocols – or how they present such protocols to the agency. That often looks like a downplaying of the psychotherapy provided in trials or its removal entirely in favor of ‘monitoring’ patients or providing ‘psychological support’ as opposed to clearly-defined psychotherapy.”

“Other drug developers are taking things a step further and aiming to engineer out the subjective effects of psychedelics entirely, with prominent companies in this realm including Delix Therapeutics, AbbVie, and Intra-Cellular Therapies.” 

“Other drug developers, however, are embracing the ‘assisted therapy’ element but instead focusing on characterizing it more clearly and ensuring adherence to it by their study therapists… sometimes with the help of artificial intelligence (AI) tools like mpathic.”

Very much like the AI market experiencing a necessary correction, this FDA decision regarding Lykos’ MDMA-assisted therapy will help the psychedelic field regulate itself.