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Some psychedelic drugs in the United States are the closest they've ever been to getting FDA approval. In late April, three drug companies were issued priority vouchers by the FDA. The goal fast track the final stages of their review. It was part of an executive order signed by the Trump administration on April 18th, which notes that psychedelics have shown potential in clinical studies to address serious mental illnesses for patients who have already tried traditional treatment options. It certainly gives a significant tailwind encouragement, validation, but it's really to a lot of work that was already underway, particularly for companies like ourselves.
Compass Pathways is the only public company to receive one of the priority vouchers, and after the announcement, its stock price, along with a number of other players in the psychedelic drug space rally, the Trump administration has started to put focus on a whole portfolio of alternative medicines for patients. They reclassified marijuana and highlighted medical benefits, and it sent political ripples through Washington, as it is a sharp reversal of the president's stance on drugs during his first term in office. So the question is, what's changed? Why now? And just how significant is an executive action like this on moving the needle for widespread use of psychedelic drugs for medical purposes in the
United States? President Trump's executive order says increasing access to psychedelic drugs could save lives and reverse the crisis of serious mental illness in America. There are over 14 million American adults living with a diagnosable mental, behavioral, or emotional disorder that substantially interferes with their life. In the weeks after this announcement by the white House. CNBC spoke with veterans who have undergone psychedelic treatment. Marie Phelan enlisted in the Army Reserves in 1999. She was deployed in Iraq in 2003 and said that her time in the military, along with a whole host of difficult life experiences, led to developing a diagnosis of PTSD in 2023.
She opted to be a part of a clinical trial for psychedelics through the US Department of Veteran Affairs, also known as the VA. Between and among my military service and several other life experiences, many of which probably are what led me to enlist in the first place. Uh. I managed to develop a pretty gnarly case of complex PTSD. Uh, that was not particularly responsive to conventional therapies.
My experience of MDMA was that it just cracked my heart wide open. I was carrying this big, heavy rucksack, and I just put it down on the beach, and I started unpacking it, one little teeny tiny thing at a time, and setting each little thing out on the waves and watching them all float away. Juliana Mercer is a Marine Corps veteran and the executive director of the nonprofit organization Healing Breakthrough, which advocates for MDMA assisted therapy in the VA. I was able to have a psychedelic experience that completely changed my life, and one of the things that this experience was able to give me was that permission to heal and that permission that I, in fact, had endured an atrocity and that I deserved
to heal as well. Up until now, the psychedelics industry has been largely on the fringes of the medical treatment in the United States. This measure is a big step towards legitimizing a controversial industry, which already has a community advocating for the treatment's results. What I think is exciting about what's happening at the VA is that they're being proactive in figuring out how they're going to use this in real world settings. And that's one of the things that Healing Breakthrough has been pushing for from day one is,
what do you need to do now to prepare for implementation in, in the real world clinical setting? We don't need to prove whether these drugs are efficacious. That's what's happening in the FDA process. Of the three companies that receive priority FDA review vouchers under the Executive order, two are developing psilocybin treatments, and one is studying an MDMA like compound for PTSD. But scientists warn that rushing the review process could do more harm than good. A lack of robust clinical data has long been one of the biggest barriers to broader adoption of psychedelic assisted therapies.
The executive order calls for expanded research into these compounds and their potential medical uses. Historically, psilocybin research has largely focused on depression, MDMA assisted therapy on PTSD, and LSD on anxiety. Another psychedelic compound specifically named in the executive order was ibogaine. I think a lot of people in the academic world feel like, um, the level of kind of confidence and kind of understanding, um, scientifically of ibogaine was a bit overstated in the context of the executive order. In truth, there has never been a clinical trial within the US. That's, that's examined ibogaine either with respect to its safety or its efficacy.
Ibogaine remains controversial because of limited clinical evidence and known cardiovascular risk. But smaller studies in the United States have shown promising results in treating substance abuse and addiction. Meanwhile, psilocybin, the active compound in psychedelic mushrooms, has been studied in the US for years, particularly for major depressive disorder when paired with therapy. Published phase two data from Usona Institute and Compass Pathways, along with early phase three results from compass, represent some of the strongest evidence yet that psilocybin may help treat depression, though researchers caution the
studies still had limitations. As for MDMA, researchers note it is technically not considered a classic psychedelic. It's an empathogen, but it is looped into the broader psychedelic medicine field, underscoring the need for more scientific clarity around how these therapies are categorized and studied in late stage trials. One study found that over 70% of participants with severe PTSD no longer met diagnostic criteria for the disorder after MDMA assisted therapy sessions. Even so, the FDA ultimately rejected the treatment, citing concerns about the quality and rigor of the underlying research.
An LSD research overall is further behind psychedelic compounds. They have different safety profiles, different risks. Ibogaine has particularly high cardiovascular risks that we could talk about. And so the question is really what needs to be done is, is a very measured, methodical weighting of the safety and the efficacy between ibogaine and other compounds. The speed at which the executive order is aiming to get some of these drugs approved has created concern in the scientific community. A few companies, like Compass Pathways, already had drugs in the final phase of clinical trials before the executive order and would have likely been submitted to the FDA this year anyway without a priority voucher. Compass pathways would have been
subjected to normal FDA approval timelines, which typically takes about ten months. The FDA has indicated a roughly 1 to 2 month timeline for the expedited review. I would say that we are absolutely holding to the same standards the FDA holds true for all drugs. And yes, in that sense, the EO was timely. It recognized the fact that there are a handful of companies that are already doing work at that scale and to that quality, and there are plenty more coming behind us as well. But what about the companies that aren't so far down the pipeline?
My biggest concern would be that FDA's standards are relaxed for politically motivated reasons. I'm not it's not clear that is the case. I think that what is required is a lot more scientific research and a certain interpretive lens that is quite objective and takes into consideration, for example, like Cardiologist's opinion of the harms and whatnot. In 2024, the FDA rejected an application for MDMA assisted therapy, citing concerns around study design and the need for additional data. If it gets approved this time around, the FDA has confirmed that it would be closely
monitored and conducted within treatment facilities to guarantee safety. It casts a spotlight on problems in mental health in the nation. It also cast a spotlight on some promising treatments, and I think it'll create some political momentum that might accelerate the review process. Still, the timing has been of particular focus. All of this marks a pretty sharp reversal in Trump's stance on decriminalizing drugs for medical treatments since his first term in office. And it begs the question, why now? Well, for one thing, Health Secretary RFK Jr has long been an advocate for alternative and natural health therapies. But the big picture here may have more to do with Trump's effort to win back lost
supporters. At least that's according to some of my industry sources. A CNBC survey from April found his economic approval rating to be at the lowest point in both terms. Because the folks I know who are particularly supportive of this, who are veterans, are not in any way won over convinced just because there's an executive order from this administration. Right. Like you're you're not even going to get my support. Me a veteran, if you fully fund the VA and benefits. You know, I they've made so many cuts to veteran benefits and to medical services. And I'm horrified and like, great, you did a good thing.
You did it. You did a right thing. So I don't I can't speak for how other people will react. Um, but if that's the intention, I doubt it's effective. I can see how um, folks on the outside or even other veterans can think that we're being used as pawns. Nobody is coercing me to be vocal about this. I decided that next morning that I was going to do everything that I could to make sure that other veterans had access to this.
