In July 2012, Congress created what is known as Breakthrough Therapy designation, a distinction that affords biotechnology and pharmaceutical companies an expedited review process for experimental drugs that may have treatment advantages over existing therapies for hard-to-treat diseases. In November 2013, Gazyva, a drug used in combination with chlorambucil for patients with chronic lymphocytic leukemia, made history as the first breakthrough therapy to receive FDA marketing approval. Since then, hundreds of drugs have earned the designation, and several have reached commercialization. An area that remains underrepresented on the FDA breakthrough therapy list that could make waves in the coming years is that of the emerging market of psychedelics, where companies such as Tryp Therapeutics (CSE: TRYP) (OTCQB: TRYPF) (Profile) is striving to provide relief for patients with chronic pain by developing evidence-based innovation in areas where today's approved drugs and therapies are lacking. Tryp is part of a select group of companies that are advancing or have already advanced psychedelic treatments into Phase 2 of the FDA clinical trial process, a small collection of impressive companies that includes COMPASS Pathways Plc (NASDAQ: CMPS), Mind Medicine (MindMed) Inc. (NASDAQ: MNMD) (NEO: MMED) (DE: MMQ), ATAI Life Sciences N.V. (NASDAQ: ATAI) and Cybin Inc. (NEO: CYBN) (OTCQB: CLXPF).
-- The majority of companies in the psychedelic space are pursuing mental illnesses, with a particular affinity for depression.
-- Tryp Therapeutics is a first mover, developing a proprietary psilocybin product for two different areas with significant unmet medical need: chronic pain and eating disorders.
-- Tryp intends to submit investigational new drug applications (IND) to the FDA in the second half of this year.
-- Only seven companies have initiated Phase 2 clinical trials using psychedelic compounds and their market capitalizations range from $85 million to $2.7 billion -- Tryp's market cap is ~$30 million.
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Opportunity Beyond Mental Illness
Many companies in the psychedelics space are leveraging data (historical, recent and anecdotal) that suggest psychedelics can be beneficial for mental disorders and diseases. These indications include post-traumatic stress disorder (PTSD), anxiety, attention deficit-hyperactivity disorder, (ADHD) and different types of depression, to name a few mental illness targets. These indications, particularly depression, are receiving tremendous attention because they represent tens of millions of patients craving medication or therapy that is more efficacious with fewer unpleasant side effects than what is currently available.
While it is common knowledge that the use of psychedelic medicines such as peyote and psilocybin to produce healing effects dates back thousands of years, modern-day research was stymied by the Controlled Substances Act of 1970 that classified psychedelics as Schedule I drugs with no medical use. In the last few years, the stigma has been lifted, and research has accelerated with some promising results, such as Johns Hopkins Medicine showing that two doses of psilocybin, the psychoactive compound in "magic" mushrooms, in combination with psychotherapy produced a reduction in symptoms for adults with major depression.
While depression is a hot-button indication for several different psychedelic companies, Tryp Therapeutics (CSE: TRYP) (OTCQB: TRYPF) is confident that psilocybin can be effective in treating several other underserved indications, namely chronic pain and certain eating disorders. The San Diego-based company has assembled a seasoned management team and group of world-class advisors to lend their expertise in developing new drug candidates for chronic pain and eating disorders as part of Tryp's Psilocybin-for-Neuropsychiatric Disorders, or PFN program. Tryp is using a standard oral form of synthetic psilocybin, its TRP-8802 product, for its initial Phase 2a clinical trials to demonstrate the efficacy of the compound across several indications.
Tryp is also developing a proprietary, psilocybin-based product, TRP-8803, with a novel formulation and unique route of administration. Tryp has already filed a provisional patent to protect the novel aspects of TRP-8803, which is expected to improve patients' experiences with being treating with psychedelic compounds compared to standard oral doses.
To bring its drug products into Phase 2 clinical trials, Tryp is working with companies with world-class expertise in their respective fields. The company has partnered with Fluence on psychotherapy designs and is working with Clinlogix as the contract research organization for its upcoming clinical trials. Curia (formerly AMRI) is manufacturing the active pharmaceutical ingredient for synthetic psilocybin that forms the basis of the PFN program, while Alcami has been contracted to develop the analytical methods and final drug products for Tryp. Most significantly, Tryp has announced upcoming Phase 2a clinical trials with the Chronic Pain & Fatigue Research Center at the University of Michigan for fibromyalgia and with the University of Florida for eating disorders.
Pain: An Indication Begging for Innovation
Tryp appears to be differentiated from its group of peers in its target indications. The company's decision to break new ground in different diseases may prove quite prescient, as it is now a first mover in both chronic pain and certain eating disorders. As it happens, these are two potentially lucrative markets where traditional drugs seem to have fallen short in effectively treating the diseases. In chronic pain, the lack of effective treatments often drives patients to seek relief for their pain through addictive substances such as opioids that fail to treat the cause of the pain, a dangerous pattern given the more than 50,000 American lives claimed by opioid overdoses each year. The market is ripe for disruption.
Tryp recently announced that it will be conducting a Phase 2a clinical trial for fibromyalgia and has partnered with the Chronic Pain & Fatigue Research Center at the University of Michigan -- the world's first Phase 2 clinical trial for a chronic pain indication using a psychedelic chemistry. Nearly 30% of fibromyalgia patients are using opioids to address their symptoms, and existing medications that have already been approved for fibromyalgia can be ineffective and induce significant side effects, resulting in only 10% of patients continuing to use the therapies after one year. Tryp expects to advance directly to Phase 2a clinical studies based on the significant amount of published data available on the safety of psilocybin and plans to file an Investigational New Drug (IND) application with the FDA for its fibromyalgia trial this quarter.
The University of Michigan will also be performing studies to advance the development of Tryp's proprietary drug product, TRP-8803. The studies will expand Tryp's intellectual property portfolio and will help bridge the use of TRP-8803 in subsequent Phase 2b studies and ultimate commercialization. Tryp is eager for its products to reach patients, potentially offering help in alleviating the suffering they experience from fibromyalgia and other chronic pain indications.
Eating Disorders: Starving for New Choices
In addition, Tryp is targeting an IND submission this quarter using TRP-8802 for an upcoming Phase 2a clinical trial for eating disorders including binge eating and hypothalamic obesity. Tryp will be collaborating with Dr. Jennifer Miller of the University of Florida as the principal investigator for the clinical trial. Miller is a world-renowned expert in these eating disorders and has affirmed that there are currently no approved drugs and only limited options to treat patients with rare over-eating disorders.
There has been little progress by pharmaceutical companies to develop effective treatments for eating disorders. Vyvance is an ADHD drug that Shire parlayed in 2015 into the first and only drug FDA approved for binge eating disorder (BED), one of the primary disorders Tryp is targeting in its upcoming trial. Both Tryp and Miller believe that patients may respond favorably to the neuroplasticity effects of TRP-8802 to help break the cycle of hunger impulses within the brain and establish new neural connections that normalize the patient's relationship with food.
Markets Value Phase 2 Progress
Tryp will be initiating multiple Phase 2a clinical trials this year, an important milestone in the path toward commercializing its products. Drug-development companies are typically valued based on their progress toward commercialization rather than on revenue or earnings multiples; with each phase of clinical trials that are successfully completed, the likelihood of the drug product being approved to market by the FDA increases, the risk of failure is reduced, and the value of the company therefore increases. For example, the valuation of drug-development companies can increase by four times upon the successful completion of Phase 2 studies.
Given the nascency of the psychedelics market, there are only a handful of companies - seven to be exact - that have initiated Phase 2 studies. For those companies, market capitalizations range from about $85 million to $2.7 billion, providing a little color as to how the markets value companies with Phase 2 psychedelic assets. Tryp's valuation is currently around $30 million.
Psychedelic Investing: A Trip for Everyone
The psychedelic drug-development market is maturing, and momentum will continue to build as new companies report on successful clinical trials. This is one of those rare occasions where groundbreaking opportunities abound for the benefit of patients and investors alike as an array of drug-development companies work to realize the medical potential of psychedelic-based therapies.
COMPASS Pathways Plc (NASDAQ: CMPS) is one of the first companies to focus exclusively on drug development using psilocybin. In October 2018, COMPASS was the first to receive breakthrough designation for a psychedelic from the FDA using a psilocybin therapy for treatment-resistant depression. In June 2021, COMPASS completed psilocybin administration to 216 patients in its Phase 2b clinical trial of COMP360 psilocybin therapy for treatment-resistant depression, marking the world's largest psilocybin therapy trial to date. The company says it is on track to deliver top-line results from the trial later this year.
Mind Medicine (MindMed) Inc. (NASDAQ: MNMD) (NEO: MMED) (DE: MMQ), which recently uplisted to Nasdaq, is a clinical-stage biotech working on a diverse portfolio of psychedelic substances for addiction and mental illness. The company is evaluating several psychedelic chemistries including psilocybin, LSD, MDMA, DMT and 18-MC, a derivative of ibogaine. MindMed has initiated Phase 2 clinical trials in anxiety and ADHD.
ATAI Life Sciences N.V. (NASDAQ: ATAI) is the highest-valued psychedelic drug-development company with a robust portfolio and $2.7 billion market cap. The German biotech is a holding company for several start-ups conducting research with psychedelics for various mental illnesses. ATAI leverages its decentralized platform approach to incubate and accelerate companies, which include a strategic investment in COMPASS and 10 of its own programs targeting PTSD, treatment-resistant depression, opioid-use disorder, cognitive impairment associated with schizophrenia, general anxiety and mild traumatic brain injury.
Cybin Inc. (NEO: CYBN) (OTCQB: CLXPF) is focused on progressing psychedelic therapeutics by utilizing proprietary drug-discovery platforms, innovative drug-delivery systems, novel formulation approaches and treatment regimens for psychiatric disorders. Toronto-based Cybin's lead drug program is CYB001, a sublingual film psilocybin product for major depressive disorder. A Phase 2a clinical trial will evaluate five different dosing regimens across 40 patients before the study advances into a Phase 2b study that is expected to enroll 120 patients.
It is an exciting time for the psychedelic drug-development industry, with new trials coming online and results from the biggest clinical trial yet expected in the coming months, which has potential to catalyze the entire sector.
For more information about Tryp Therapeutics, please visit Tryp Therapeutics Inc.
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