Psyence Group [CSE:PSYG], the biotech company which is pioneering the use of psychedelics in mental health and well-being, has received approval for a Phase IIa medical trial from the UK’s Medicines and Healthcare products regulatory agency (MHRA). The clinical trial is designed to assess the efficacy and safety of psilocybin-assisted psychotherapy for the treatment of adjustment disorder as a result of terminal cancer diagnosis.
Psyence is going to be partnering with Clerkenwell Health, a leading psychedelic contract research organisation which will be helping it to design and deliver the trial. The trial will be conducted at two centres in the UK.
The approval is an important step for Psyence, which has emerged on the cutting edge of the development of psilocybin to treat the sort of extreme anxiety that can occur after a terminal cancer diagnosis. Its projected product would be used in conjunction with psychotherapy. Currently the medical profession relies on synthetic drugs, with mixed success.
“The UK’s MHRA’s approval to conduct this clinical trial in the field of palliative care, has the real potential to allow Psyence to create a paradigm shift in the treatment of patients with an incurable illness, in order to improve quality of end-of-life and the standard of care,” explained Dr. Neil Maresky, Psyence’s Chief Executive Officer. “It is a privilege to conduct research with psilocybin that may result in significant improvements in patients’ lives. We are thrilled that we can now progress this important trial.”
An estimated 40 million people require palliative care annually, with 75% of these patients exhibiting a high burden of depression, anxiety or psychosocial distress after diagnosis. Adjustment disorder is a serious condition affecting 40% of patients with a terminal diagnosis. It severely affects the patient’s and their family’s quality of life and, as such, can lead to over utilisation of healthcare resources and medications.
Investment bank Hannam & Partners initiated coverage of Psyence Group earlier this month with a target price of C$0.55 per share. Hannam highlighted what it calls “the real value” of the company, the development and eventual licensing of its Rx product portfolio. Hannam constructed a risked C$62.4m NPV12% for Psyence’s palliative care asset alone, which the investment bank reckons could offer additional upside as the remaining line up matures. Psyence also offers “a compelling valuation vs psychedelic peers, a gap we believe will narrow as Phase II trials commence,” Hannam said.
The drug discovery program at Psyence is considered the real engine of value here. The company also has a functional mushroom joint venture and a production facility vertical. Its palliative care research, however, is seen as having breakthrough therapy potential.
How important are the Phase II trials for Psyence?
The therapy Psyence is researching is already considered to have significant therapeutic benefit: it is supported from studies in the 1950s which saw psychedelics as a major boon to treating extreme anxiety and depression; further progress was retarded by the Nixon administration’s war on drugs in the 1970s. Psyence believes we could be on the cusp of a major new phase of adoption of psylocibins in palliative care.
Right now the potential demand base looks impressive: an estimated 40m people require palliative care annually with 75% of these patients exhibiting a high burden of depression, anxiety or psychosocial distress after the diagnosis. The new trial in the UK for Psyence is expected to provide important data sets ahead of a projected Phase III trial. The company said it was expecting to complete Phase 2 trials by the end of Q4 2023 and rapidly proceed to a Phase 3 trial.
Hannam & Partners said its target of 55 cents Canadian offers a 450% upside for investors as catalysts approach. It is estimating peak sales of US$1.1bn in the palliative care area alone, with a modelled 23.6% probability of regulatory approvals.
It should be noted that Dr Maresky is a considerable figure in this area of research, having previously been VP for Scientific Affairs at AstraZeneca Canada. He has also spent 17 years in research-based pharmaceuticals. including in roles with the likes of Bayer and Novartis. As such he is well-placed to lead the charge on the Psyence approvals process.
