Navigating The FDA Playbook for Psychedelic Therapies

Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Ritu Baral:
Welcome everyone to episode 3 of TD Cowen's psychedelic podcast series, Preparing for the Trip. Episode 3 is Navigating the FDA Playbook for Psychedelic Therapies, and we're joined today by our guest speaker, Mike McCaughan, founder of Prevision Policy, a leading provider of regulatory and reimbursement policy analysis for the biopharma industry and to TD Cowen, a valued partner to us. McCaughan speaks frequently on regulatory reimbursement and policy developments affecting the biopharmaceutical industry.
Hi, Mike. Thank you so much for joining us for this episode of Preparing for the Trip. We're excited to have you with us today for the installment on Navigating the FDA Playbook to discuss the evolving regulatory landscape, including how FDAs currently think about the landscape, implication for the recent executive order aimed at accelerating development and approval, and how very recently updated FDA industry draft guidance may shape clinical development, safety monitoring, REMS, and real-world adoption. Can't wait to get your thoughts, Mike.
Michael McCaughan:
Great to be here. Thanks for having me.
Ritu Baral:
Let's start with FDA's current posture towards psychedelics. Stepping back, how would you characterize FDA's current view towards psychedelic therapies as more programs move into this late-stage development, particularly in light of that new guidance from last week?
Michael McCaughan:
Sure, great. We really try to tackle this question in two different directions. It's kind of the bottom-up view at FDA and maybe the top-down view from the president down into FDA. From the bottom-up view, I think it's important to recognize that the recent executive orders and other actions coming out of the White House are entering an agency that I think has already shown a degree of excitement and enthusiasm for at least the potential, the potential of breakthrough medicines, that might have significant impacts on mental health disorders. A lot of these therapies that are coming through the pipeline now have breakthrough designations awarded by FDA as a signal of their enthusiasm, and those designations predate the Trump administration, go back several years.
I think if you listen to what FDA folks have said publicly, like Tiffany Farchione is the head of the psychiatric division that will review these therapies, they've spent their careers doing reviews of antidepressants where if you can find a 20% improvement on a rating scale in 2 out of 5 trials, you're happy, and now you're seeing at least reports of much more dramatic efficacy results in some pretty tough-to-treat conditions. I think the excitement level of the potential of the field there is very real.
And then of course, I think you can also look at the review of a psychedelic medicine a couple years ago for MDMA that ended negatively. Obviously, that product was rejected. But if you look at how FDA approached that review and the communication they did around it, I think they were going out of their way to say, "There's problems with this application, but that doesn't mean we aren't excited about the potential if these therapies can show it in a rigorous way what they can do," and that they will absolutely be ready to approve them if the efficacy is there and demonstrated in rigorous trials.
There's this top-down piece coming from the White House, Joe Rogan on a podcast and coming into the White House and doing executive orders, former Commissioner Makary as well. That's kind of a double-edged sword. The good news is you know if you're at FDA and you're inclined to approve one of these medicines, the White House isn't going to give you a hard time about it, quite the opposite. But there is, if anything, a little danger that that sense of top-down push causes some pushback within the agency. If there wasn't already, in my view, this kind of organic bottom-up receptivity, I'd be more worried about that, but it is a factor to weigh as we think about this process.
Ritu Baral:
I remember that Lykos AdCom, and I remember the FDA pushback, correct me if I'm wrong, being more about conduct, like protocol conduct, missing data, really things outside the norm rather than FDA pushing back on the magnitude of efficacy or the meaningfulness of the data. They were just more concerned about if they could trust it given the reporting issues. Was that-
Michael McCaughan:
Exactly, and I think they also did, both at the advisory committee and some follow-up communications, to really try to educate other sponsors about where the pitfalls were. And I think if you were looking at it, if there was a belief within the agency that this whole class of medicines was ridiculous and this is hype and hysteria, I don't think they'd have gone to that extra effort to say, "Here's where we think you can do things differently and have a chance at success."
Ritu Baral:
What do you think the implications of this new guidance is for late-stage sponsors, especially like the COMP360 TRD program, which we're modeling first half of '27 approval? That's so close to potential approval. Does the guidance reduce regulatory risk for the whole field, for earlier-stage programs, for later-stage programs? How do you see that?
Michael McCaughan:
Yeah, and of course the final guidance was just released this week. I guess it's obviously a nerve-wracking moment for a sponsor when you're in the process of filing and the guidance is potentially being updated. The draft guidance came out in 2023, and the final guidance... We can talk about some of the differences and there are some in there. But big picture, the advice is the same. I mean, there's nothing radically different here. And over the course of three years, a lot of development programs that have advanced, that FDA has been engaged with these sponsors, clearly there was nothing where the agency felt like, "Wow, we really need to rethink what we said three years ago and say something totally different." So, that to me is the big takeaway from the final guidance versus the draft that if you were relying on things FDA has been telling you over the past three years, it does not appear there's been any change in thinking.
Again, any sponsor with a breakthrough designation has had access to an engagement with FDA officials to get that advice firsthand as well. Overall, I took it as a reassuring sign if I were a sponsor in this field that the bar hasn't suddenly moved dramatically one way or the other.
Ritu Baral:
So, a couple things that we noticed on the Cowen team, the guidance recommends a blinded controlled 12-week efficacy assessment and suggests that blinded long-term follow-up of up to 12 months may be, quote, unquote, "most informative." How should sponsors interpret that? I mean, is that just a nice way for FDA to say like, "We need 12 months blinded data to approve"? Because that is something that the later-stage applications are not designed to do, even though they might have alignment already.
Michael McCaughan:
Yeah, I think it's an interesting change for sure. I read it, and I think you quoted the key phrase there. The most informative design would be 12-month blinded data and in the context of thinking about things like the need for re-dosing and issues like that. In the draft, they kind of said they expect open-label 12-month data. In a way, you could say they're saying the same thing. It's almost obvious to say that it would be more informative to have it be blinded 12-month data. For that matter, if you get blinded 20-year data, that would be really informative, but probably not feasible. I don't see that as likely to be an approvability issue for any near-term applications. Could it become an issue around labeling and what it says about the potential or just doesn't say about re-dosing or other issues like that? Definitely. I think that's probably where it will show up more potentially as an issue for these sponsors. It obviously becomes really challenging once you've approved it to then go back and get that data.
So, it wouldn't surprise me if that's a complicated area of discussion. It doesn't strike me that it's going to be, "Well, we can't approve it." You could, I think, ask potentially, if you wanted to be really strict, I'm not predicting this, but you could be really strict, and say, "It's only approved for how it was studied," a single dose, or if a sponsor did multiple doses, that's the approved label, and don't do more than that. And then you would have the leeway to say... and you can run a study on repeat dosing that's going to answer some of those questions. The change in the guidance doesn't suggest to me that FDA is making a big point here. I do think they probably are thinking about how challenging it's going to be to write a label, what you're going to say about use beyond the amount of doses that were studied in the trial, and I think that is going to be an issue for the labels.
And I suspect, regardless, FDA's going to be conservative about it, and they'll have to see what the quality of the data that they get from presumably open-label follow-up is to help guide that for the time being.
Ritu Baral:
What do you think FDA will need to see on safety for a therapy like COMP360? We hear from some of our advisors that FDA still can't get over functional and blinding, but that wasn't particularly emphasized in the guidance this time, which I was fearing. But on the safety front, what issues are most important to characterize? Anything new? I mean, there was a bunch of new stuff on drug liking, abuse potential, but was that substantive?
Michael McCaughan:
So, a couple thoughts there. First on the functional and blinding issue, that really is the most challenging thing about the mechanism in this class. I do think, and we can talk more about this later on if we want, the real issue there will be what, if anything, FDA sees when they do clinical site inspections. You can sometimes learn from case reports and patient reports that the study was unblinded. They actually knew what they were getting or they didn't, and that might not be obvious in what's been released publicly to date, but that's clearly a challenging issue. The whole purpose of the guidance on designing the efficacy trials is to come up with ways to overcome that, and then the proof will be in the pudding. That will definitely be a review issue for all these applications. Can you believe that, in fact, the drug effect that was seen is a blinded effect?
Added to that, are you seeing an effect size that is so big that you no longer care? That is the other thing to keep in mind. There is enough knowledge about the difficulty of treating many of these mental health conditions that there are certain degrees of response where you're almost in an oncology setting where you don't care that, whether there was a control arm or not, the response rate is so high. You're comfortable there's a real effect here.
Ritu Baral:
Mike, is that more about the effect size or the treatment population, the overwhelming unmet need in say TRD or maybe GAD or-
Michael McCaughan:
Yeah, you better have... A very large effect size coupled with the unmet need makes it much easier to get over concerns about unblinding. That's not to say that they might also be very convinced that there is adequate blinding and you have a very real measured effect size, which is great. On the safety side, again, to me, that is the other obvious big area of the review. The key issue, of course, is the primary risk profile is directly tied to the mechanism of action. People are going to have potentially hallucinogenic effects or whatever the other effects of the medicine will be. We want to make sure those aren't doing more harm than good, and that's always a challenging... There's plenty of medicines like this, they're not hallucinogenic, but drugs to treat clotting disorders. You can prevent the clot and cause a bleed. So, it's a common area that FDA wrestles with. Are you finding the right mix, the right level of benefit versus the risk you're exposing people to? And that's going to be a key focus of the review.
I will note, the guidance also calls out on the preclinical side the history of risk of valvulopathy and other CV risks in related compounds. Again, that's something that can be ruled out hopefully preclinically and shouldn't show up clinically. But that would be just another flag to watch for.
Ritu Baral:
So, one of the things that has popped up in this drug class is issues of post-treatment anxiety. Mike, you talked about the actual treatment period and the illusions and hallucinations and trip essentially, but recently, the safety scrutiny has focused on this post-dosing period of 24 to 48 hours and periods of anxiety or signals of a potential suicidality and teasing out what is background TRD, which is definitely a thing, versus induced by the medicine. How is FDA's understanding of suicidality in TRD trials where baseline risk is already high? How do they do that analysis?
Michael McCaughan:
Yeah, it's an extremely difficult issue, as you framed it. You're dealing with a patient population where obviously suicidality, suicidal ideation is part of the diagnosis. And when you have a patient after treatment who is still suicidal or, God forbid, actually attempts or completes suicide, is that a treatment failure, or is that an adverse event? Either way, it's not good. Obviously, it's not a good outcome of the therapy. One great solution is if it's very clear that the overall levels of suicidality decline in the treated population versus the control, and that makes it a lot easier, and you can get less worried about, are we reducing the rate of suicidal ideation by 50%, but also causing an extra 10% to come back through adverse events? That kind of analysis can go away if there's a clear enough difference. When you see an imbalance obviously that works against the treatment, that's a huge problem.
If you're left with you're showing improvements on a questionnaire, but not necessarily showing improvements on what you view as the worst impacts of the disease, probably suicidality is right up the top here, that can also make the review more difficult. It does not mean the drug is in trouble if one of the patients on the treatment arm attempted or committed suicide. What would be problematic is if it's clear that the rate of suicidal ideation and suicidality ended up higher rather than lower. That's pretty self-evident that it's going to be a problem.
Again, an issue that FDA has dealt with, the SSRIs, this was a huge problem there obviously. And there, you had therapies that just are not dramatically effective, and they were used broadly, and of course there are case reports of individuals who commit suicide. For a long time, that kind of paralyzed the agency, and there were blocks and warnings in the class and so forth.
Again, I think the premise of these medicines is you are seeing some pretty dramatic benefits. And if you're squinting to try to see the efficacy, the questions you're asking about suicidality in the treatment arm are a much bigger problem. If you're seeing dramatic efficacy, it's a lot easier to say, "It's too bad it didn't work for everyone."
Ritu Baral:
Got it. That's a very good way of putting it. Okay, so the $64,000 question, which doesn't pay for much these days, investors want to know what the REMS is going to look like, which is going to be the big overhang, which is the main overhang on market models for this class of therapy. How do you think that REMS is going to look, particularly for COMP360 given its proximity to potential approval? How much do you think that the Spravato REMS will serve as an example? And how different might true psychedelics versus ketamine require a different framework?
Michael McCaughan:
Yeah, and it is a great question, and it's one that I'm as eager as anyone else to see the answer to, because to me, this is the meat of the reviews. You've raised a lot of questions that could undermine the efficacy analysis. And if you're doubting the efficacy, the therapies aren't going to get approved. But assuming that FDA is convinced that there are indeed profound benefits here, to me, the entire issue in the review is, so what is the post-marketing control going to look like? I think on the FDA piece of it, I think it's very appropriate to look at the esketamine program, Spravato program as a precedent.
Clearly, these are not going to be medicines that people take home with them. This is going to be an in-patient or an in-office treatment, and there will be an expectation, a requirement for patients to stay in the treatment center for an appropriate period of time. And I would suggest looking back at the protocols used in the clinical trials as a guidepost for what FDA is probably going to try to, enforce is a strong word, enforce through a REMS program. But I think there's a bigger level of this.
At the same time the FDA finalized the guidance on development of these therapies, they also announced a public meeting for September to really talk about, so how are these things actually going to be used in real-world practice and how can we make sure they're used in a way that's maximizing the benefits, protecting patient safety, absolutely avoiding or mitigating as much as possible any kind of abuse or misuse of the therapies? It's a public meeting in September. The format is for people to speak to FDA and for them to listen. They'll have a panel of people from the Center for Drugs there, as well as some partners from other government agencies, because FDA is really framing this as much bigger than anything FDA can do even through a REMS.
Ritu Baral:
Do you think the DEA is going to be there on September-
Michael McCaughan:
They probably ought to be, but they'll be honestly less important in that context. More like the VA, HRSA groups that oversee standard setting for medical practices, or in case of VA even practice medicine. HRSA, the Health Resources and Services Administration, and they oversee a lot of grants to federal health centers and community health centers and so forth. So, they can set standards that people have to follow if they want to keep getting their grants and things like that. It's really going to be about a lot of things around provider education and expectations for who is appropriate to administer these therapies and what the training and educational standards for those people will have to be. And I do think that will also be a meeting where there is a chance, for those who like to, to try to read the tea leaves if and when the FDA people at the meeting start asking questions. And that will, I think, help people start to get their minds around where FDA's thinking is on what they can or will do with the REMS for these products. But that's September 1st, so it's something to watch for.
I will also just add while we're on the topic of the meeting, the meeting is really interesting to me because it's an event that is preparing for the availability of psychedelic treatments for mental health disorders. Again, it's been the push from the Trump administration, from the president himself to make this happen, so that's part of why they're having the meeting. But it sure doesn't seem like the kind of event FDA would be scheduling if they didn't believe some of these therapies are going to be approved in the future. Does it mean that the first one in is going to get approved? Of course not. But this is not the kind of meeting FDA would hold if there were still, in their minds, an open question about whether these therapies will ever be approved.
Ritu Baral:
Got it. Moving to the executive order, an approval pathway that you mentioned, between the executive order and the National Priority Voucher, what do you think the timelines for the qualifying psychedelic therapies could be? I mean, do you think it could compress to one to two months per the national priority voucher? How realistic is that given all the things that Tiffany Farchione has said recently on bandwidth?
Michael McCaughan:
Yeah, there's a lot of moving pieces in that, the so-called Commissioner's National Priority Voucher, which I guess FDA is now just calling the National Priority Voucher, if they're calling it anything at all. We just saw an approval this week for a new cholesterol therapy that was under this NPV program, and that review technically took less than a month for a new molecule. We had Foundayo approved for obesity under the program in a pretty short timeframe as well. So, they've proven they can do it. Those two applications that I mentioned, extremely large applications in terms of the size of the patient population, much larger than anything that would be coming through in the psychedelic field. So, there's a lot of data. But on the other hand, they're pretty easy applications when you're dealing with established classes of medicine with established endpoints. There weren't a lot of things to talk about and work through.
The other thing to mention with it is it's really about the timeline to market rather than the review time. I think the sponsors have been talking about submitting these applications in pieces. The filings might be beginning now or soon, but not technically being filed until the end of the year. So, you can look at that a number of different ways and say, "Well, is it really going to end up being a one or two-month review, or is it really an eight-month review that just officially didn't start for six months?" Regardless, I think FDA has committed... I don't think they love this voucher program, I don't know that it's going to continue, but they awarded some vouchers to people, and I think they are wary of just taking that away. And then even before the voucher program, there was processes in place where review divisions can expedite an application and work ahead of the typical user fee goal date.
Ritu Baral:
The rolling NDA, which has... Right.
Michael McCaughan:
Rolling NDA does it. And then they, at any time, could tell a sponsor, "We received your application, and it's an eight-month review, but we're going to get it done in four months," and that's always been the case in their operating procedures. So, those things are there, and I expect they'll use them. One to two months feels fast. They've done it a couple of times actually now with these vouchers, but most of those reviews were three or four months, and that's still counting from perhaps a filing date that was itself a month or two later than maybe it would've been if they were just filing it without going through the voucher process. But I do expect they will attempt to accelerate these applications and try to beat the eight-month rule.
Ritu Baral:
What about DEA rescheduling? Just given the most recent acquisition of Atai by Lilly, that was an inbound question that I got from a lot of clients. When would rescheduling occur, first of all? And is there any chance that the DEA will not reschedule these actives after FDA approval?
Michael McCaughan:
So, this is where the top-down push definitely makes that an easy question to answer, the second part anyway. DEA will reschedule them. The administration is behind them. So, if FDA is ready to approve or approving, whether it's psilocybin or a different ingredient, it will move out of Category 1 because it has to to be FDA approved. The process and the timing for that, there's a whole lot of bureaucracy that gets into it. The easiest way is there's an active ingredient being approved by FDA, and there's a format for them to submit their scheduling recommendation to DEA, and DEA publishes it for comment, and then it changes.
Ironically, we just talked about this faster timeline for the voucher review, there's been a lot of work to eliminate the gap between FDA approval and DEA scheduling for FDA-approved drugs. I'm not sure that the voucher timeline is going to work with that. There could still be a month or two lag because of that, depending on how quickly FDA moves on its review. But I don't think DEA is in any way going to be a barrier to these. If FDA is signing off on them, I don't think DEA is going to be a barrier. If the president wasn't focused on it, there'd be more risk that just the normal bureaucracy would take a little longer, and I doubt that'll happen here.
Ritu Baral:
Understood. Mike, thank you for taking the time to review all of these topics. Would love to round back with you once we have any additional developments. Obviously, the TD Cowen team is expecting the first psychedelic approval in the early part, in the first half of 2027. So, we'll see how these turn out and what will be left to discuss, especially after that hearing in September.
Thanks, Mike.
Michael McCaughan:
Thank you.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.