Pharma Moves In: Investors, Developers and Lilly’s Carole Ho at the Psychedelic Healthcare Forum

Earlier this month, we co-hosted the Psychedelic Healthcare Forum in New York City. There, several sessions featured conversations related to psychedelic drug development, which we recap here.

The three sessions covered in this article were:

• Courting Capital for Psychedelic Medicine
• The New Era of Psychedelic Drug R&D
• A Conversation with Carole Ho

Investors: Efficacy Risk Has Faded; REMS and Reimbursement Haven’t

Drug development is notoriously capital intensive, and the types of investors that have funded psychedelic candidates have changed dramatically over the past half-dozen or so years.

In this panel, we heard from investors of various stripes, namely:

• Ritu Baral, TD Cowen
• Edny Inui, Palo Santo
• Connor Williams, RTW Investments
• Moderator: Madison Muller, Bloomberg News

Baral, a Managing Director and Senior Biotechnology Analyst at TD Cowen, kicked things off by sharing that she began hearing about psychedelics studies from around 2018. Those were “very, very intriguing”, she told the audience, and she started meeting companies not long after that; today her coverage includes a focus on psychedelics.

Back then, Baral went on, there were questions about efficacy, about FDA’s view of the drugs, and about commercialisation. “I would say, in my experience over the last seven or eight years, we’ve seen them get knocked down one by one.” She added that clinical trial risk has been mitigated and that there is greater clarity from FDA.

“There’s still a lot to be figured out,” Baral acknowledged, flagging reimbursement and operational questions as key areas.

RTW Investments Senior Research Analyst Williams, too, was looking at psychedelics companies back in 2018. “I remember getting a call from a banker,” he shared with the crowd, “and he said to me, ‘Connor, there’s this company claiming that they know you, and we don’t know why you’d speak to them!’” He had to explain why he thought they should take Compass Pathways, which RTW has since become an investor in, seriously.

Inui, meanwhile, suggested that an early concern around the strength of intellectual property (IP) surrounding drug development programs in the field has largely subsided. “What we’ve seen in the space is that the first movers have novel formulations and prodrugs, and those are the companies that end up getting the interest of large pharma”, she said.

One of the benefits of large pharmaceutical companies entering the space, Inui believes, is that they are “very good at the end-stage process of making sure there’s infrastructure.” She cited the example of Johnson & Johnson’s work to drive the adoption of Spravato. “There was a lot of learning there,” she said, “and there will be a lot of learning in the upcoming years.”

Williams agreed and added that, with its resources, pharma can also trial psychedelics in “a massive set of indications”, whereas biotechs generally have to stay focused, due to capital limitations.

“Pharma has never been more cash rich and pipeline poor,” Baral chimed in, “they have to mobilise those big cash balances they have into something before they run off those patent cliffs.”

“We’re seeing a broader trend of a return back to neuroscience of large pharma,” Inui, a neuroscientist herself, added, mentioning Bristol Myers Squibb as a potential suitor for psychedelic candidates.

Muller asked the panel where the next biggest opportunities are for drug companies and investors.

“There is definitely room for more psychedelics to go to niche fields,” Williams said, noting that there are ‘20 SSRIs, 40 dopaminergic antipsychotics, and just two or three pharma acquisitions of psychedelics.’ “There is much more wood to be chopped,” he went on.

Baral cited PTSD as a large opportunity, as well as continued development in depressive disorders. Inui said that companies and investors can look to academic studies for signals of potential opportunities for industry trials.

In terms of the largest risks for late-stage developers, ...