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When a psychedelic substance gets to Phase 3 trials, like the one completed by the Multidisciplinary Association for Psychedelic Studies (MAPS) with MDMA in August 2021, there is a general sense of relief. It’s been a long journey from Phase 1 for most substances in a clinical trial process—up to four years for Phase 3 alone in some cases. And only 33 percent of experimental drugs move from Phase 2 to Phase 3.

But getting to Phase 3 signals an extra red alert for any psychedelic company working the process to get Food and Drug Administration (FDA) approval.

According to an investigative article in the Journal of the American Medical Association (JAMA) Internal Medicine, Phase 3 clinical trials provide the highest level of evidence that an experimental treatment is safe and efficacious. But many of these trials for investigational or experimental drugs like psychedelics, which typically involve large numbers of patients, and require substantial investment on the part of participants, investigators, and sponsors, fail at this stage. 

Only 25 to 30 percent of experimental drugs are approved by the FDA at this stage, and move out of Phase 3 to Phase 4 trials.

Using public sources and commercial databases covering drugs and biologics that started trials between 1998 and 2008, the investigative article reported that roughly half of investigational drugs entering late-stage clinical development fail during or after pivotal Phase 3 clinical trials, primarily because of concerns about safety, efficacy, or both. Results for the majority of studies of investigational drugs that fail are not published in peer-reviewed journals—just 8 percent, according to the JAMA investigative article, demonstrating a lack of information sharing that could cause other trials to waste time and resources if their trials use similar methodologies.

For psychedelics specifically, there is historical context for problematic clinical trials. Research on psychedelic drugs in psychiatry in the 1950s and 1960s was abandoned for a number of reasons, according to a research paper published by the National Institutes of Health (NIH). 

A major factor was that clinical research on psychedelic drugs was caught up in the tighter regulation of pharmaceutical research after the Thalidomide disaster in 1963. (Thalidomide was used to treat nausea in pregnant women, but was later discovered to create severe birth defects.)

Psychedelic drugs also presented special challenges for randomized, placebo-controlled clinical trials in the 1970s that were not as positive as the claims made by their advocates in the 1950s and 1960s. Clinical research became more difficult after 1965 when Sandoz ceased providing psychedelic drugs for research, and their nonmedical use was prohibited in 1970.

But, contrary to the usual narrative, the demise of psychedelic drug research was not solely due to the “War on Drugs.” The NIH research paper said that the demise of psychedelic research came about in part because of the pharmaceutical industry’s lack of interest in funding clinical trials.

All that changed around 2000, when psychedelic clinical trials started up again and, since then, have gained momentum especially over the last few years.

Now, there are 111 psilocybin clinical trials in some stage of development, the majority of them announced or begun between 2019 and 2022; 117 clinical trials with MDMA, with 17 announced or begun in 2022 alone; and 30 clinical trials of LSD.

But to be sure, there are still clinical trial difficulties. One recently withdrawn psilocybin study was ended because of violations of good clinical practices, or GCP. These could be violations of getting informed consent, adherence to protocol, or reporting of serious adverse events during the trial.

Another psilocybin study was withdrawn because the sponsor of the study changed. The study will be released, managed and registered by another institution who will be acting as a responsible party, according to the trial record.

There are a host of other reasons that a psychedelics clinical trial was terminated, including staff turnover, lack of funds, and insufficient patient population for study enrollment. 

Clinical trials have also failed in general because human subjects not responding to the drug the way that animal models do, or because of an insufficient understanding of how the investigational product interacts with the body.

Unexpected results from clinical trials can be devastating. One example: When Compass Pathways (NASDAQ: CMPS) announced their Phase 2b clinical trial with psilocybin for treatment resistant depression in November, 2021—the largest randomized, controlled, double-blind psilocybin therapy study ever completed.

The main issue? 12 patients out of 233 reported treatment-emergent serious adverse events (TESAE) that included suicidal behavior, intentional self-injury, and suicidal ideation.

The Compass Pathways stock declined significantly—as did some other psychedelic companies as news of the trial results rippled through the industry. Compass Pathways’ stock decline from the results of that September, 2021 trial continued through 2022 (though its showing signs of recovery today).

Psychedelics is helping drive more innovation when it comes to clinical trials. There are new ideas emerging in clinical trial structure for psychedelics. The FDA developed the “fast track” process to facilitate development and expedite review of drugs to fill an unmet need, such as psychedelics for PTSD. 

And there is a fairly new concept from the FDA’s critical path initiative in 2006 called the adaptive design clinical trial, defined as a design that allows modifications to the trial and/or statistical procedures of the trial after its initiation without undermining its validity and integrity.

The purpose is to make clinical trials more flexible, efficient and fast. 

Due to the level of flexibility involved, these trial designs are also termed as “flexible designs.” It is being used now by MAPS in their Phase 2 trials. That kind of design is common for drugs with limited investment (either because they are being developed by nonprofits, because they have limited revenue potential if approved, or for rare conditions).

Recent policymaking aimed at stimulating pharmaceutical innovation has focused on allowing drugs to be approved on the basis of smaller data sets, according to the JAMA investigative article. Some commentators have proposed waiving the need for phase 3 testing, although others

have responded that approval before rigorous study could worsen health outcomes by leading to widespread use of toxic or ineffective drugs that would have otherwise been shown to

have failed. “As many investigational products fail in late stage development because of inadequate efficacy or safety, our findings suggest that additional efforts to promote drug

development should be directed at improving the validity of preclinical models for use in translational research and increasing the number of innovative products entering trials,” the research article concluded. “The timely publication of trial results for all investigational agents,

including those that fail in late-stage clinical development, is imperative.”