With AbbVie’s $1.2 billion acquisition of Gilgamesh Pharmaceuticals’ lead depression drug, the psychedelic therapeutics space has soundly rebounded from Lykos’ rejection last year. There are now seven programs in Phase III trials across the sector, with multiple companies vying for that first approval.
Replete with fast-acting, even curative potential, psychedelic therapeutics have long piqued the interest of Big Pharma. Johnson & Johnson’s ketamine derivative Spravato hit the U.S. market in 2019 for depression, and in 2023, Japan-based Otsuka Pharmaceutical acquired psychedelic biotech Mindset Pharma and its psilocybin-like assets. But when AbbVie picked up Gilgamesh Pharmaceuticals’ lead depression asset for $1.2 billion last month, it sent a new wave of excitement through the industry.
Besides J&J and Otsuka, most neuropsych-focused pharma companies “have kept a distance in terms of the potential of psychedelics to treat or meet the unmet needs in this space,” Aaron Bartlone, chief operating officer at Cybin, told BioSpace. “So we see this AbbVie/Gilgamesh deal as a very positive sign endorsing both the science, of course, and the commercial opportunity that’s there.”
Big Pharma players that are interested in scooping up psychedelic assets have many options available. Gilgamesh and Cybin are joined by several active players, including Resilient Pharmaceuticals—formerly known as Lykos Therapeutics—which sustained a blow last August when the FDA rejected its midomafetamine (MDMA)-assisted therapy for post-traumatic stress disorder.
While no other major pharma firms have yet dipped their toes in, Bartlone said he could see Eli Lilly, where he began his career, getting in the game. “I’ve got a lot of ex-colleagues there, and I wouldn’t be surprised if they somehow enter this space,” he said. “They have a lot of extra cash to throw around.”
Graig Suvannavejh, managing director of Equity Research at Mizuho Securities, agreed, saying the historically neuroscience-focused company has “GLP-1 dollars coming in out of their wazoo right now.” Lilly has not responded to BioSpace’s request for comment on its potential intentions in the psychedelics space.
Besides Lilly, Suvannavejh recommended looking at companies that have recently been active on the M&A front in neuroscience. He specifically pointed to Bristol Myers Squibb, which paid $14 billion to acquire Karuna Therapeutics in December 2023, and J&J, which kicked off this year’s action with a similarly sized buyout of Intra-Cellular Therapies.
“J&J already was very ahead of the game by leaning into a ketamine-based product in Spravato,” Suvannavejh told BioSpace. “So it would seem to me that they also could be very interested.”
Finally, Suvannavejh gave a nod to Merck, which he said “has got a lot of interesting decisions they have to make” with blockbuster immunotherapy drug Keytruda coming off patent in 2028. “I’ve seen them do a couple deals in the neurodegenerative disease side of things, but maybe we could see them get bigger in psychiatry.”
Based on current market predictions, these companies would have good reason to jump in. According to Roots Analysis, the psychedelics drug market, which stood at nearly $2.8 billion in 2024, could reach almost $13 billion by 2035.
Barriers and Benefits
One reason for the heightened interest in psychedelic therapies is their lofty potential. A recent mid-stage readout for Beckley Psytech’s investigational intranasal psychedelic showed what Jefferies called “profound efficacy” in patients with treatment-resistant depression, for example. On the other hand, Barlone said, “there’s a lot of trepidation, because this is going to blow up the model of interventional psychiatry as it exists today.”
One potential barrier for pharma companies is a fear of the psychotherapy piece, he continued. Pharmaceutical companies have traditionally sought out medicine-only solutions. Lykos’ MDMA-assisted therapy was assisted by talk therapy. “I think this has been one piece, because as we know, the practice of clinical medicine is not regulated,” Bartlone said, leading to questions around how psychotherapy would translate to a label.
He added that pharma may also be struggling to adjust to a new model of intermittent dosing, with what he referred to as “wrap-around psychotherapy,” or talk therapy prior to and following psychedelic treatment, and more. “Having come from this space and put a lot of these drugs onto the market, these are completely different,” Bartlone said.
But Rick Doblin, founder of the Multidisciplinary Association for Psychedelic Studies (MAPS), which founded Lykos, said it would be unfair to take Lykos’ rejection as a rejection of therapy more broadly. In fact, Doblin stressed the important role that psychotherapy can play in combination with certain psychedelics like MDMA and cautioned companies against minimizing its role in their regimens.
“I think that the for-profit psychedelic companies . . . have generally taken the view that it’s the race to the bottom in terms of therapy,” he said. “This narrative of FDA doesn’t want therapy, I don’t think that’s true.”
Other regulatory hurdles—further elaborated in the FDA’s recently released complete response letter to Lykos—may also cause some interested parties to pause. Durability of response and challenges to conducting double-blind studies for a drug that has at least a partial psychedelic effect have been much discussed.
For psychedelic companies—and pharmas looking to get into this space—Doblin offered one key piece of advice: transparency: “Put all the communications with FDA in the public domain soon as you get them and put your data in the public domain.”
Indeed, AbbVie was cautious with the Gilgamesh deal, BMO Capital Markets said in an Aug. 25 note. “We believe the lower deal value could reflect conservatism around psychedelic valuations in light of regulatory backdrop for compounds, making today’s deal a well-balanced risk/reward acquisition for the company,” the analysts wrote.
A Willing Market
Still, if the broader pharma industry does follow AbbVie into psychedelics, the psychiatric market is ready and waiting, Bartlone said. According to a Cybin survey of over 400 mental health providers worldwide, more than 90% said psychedelic therapies carried a unique potential compared to the standard of care, while 95%-plus said they were “absolutely” open to integrating psychedelics into their practices once approved, Bartlone said.
At Mizuho, Suvannavejh is hearing similar feedback from interviews conducted recently with psychiatrists. “They’re very excited about the potential of the psychedelics, and mainly because of the efficacy that we’re seeing and that they can be rapid acting,” he said. Additionally, he added, in depression, schizophrenia, bipolar disorder and other psychiatric disorders, many patients will stop responding to first- and second-line treatments, leading to frequent medication switches. “There is still an unmet medical need [and] psychedelics as a class represent a very exciting class of agents where we know . . . that there are very promising signs of efficacy.”
Since June 2024, when BioSpace published our first deep dive into the psychedelic therapeutic space, the number of Phase III programs has grown from three to seven, including candidates from Cybin, MindMed and Compass Pathways.
Cybin, which last November reported a 71% remission rate in patients with major depressive disorder treated with its psilocin therapy CYB003 in Phase II, is currently building out operations to scale its Phase III program. “It’s a crowded market in the clinics,” Bartlone said. “Everyone’s experiencing this because there’s a confluence of Phase III trials that are going on right now.”
Bartlone isn’t concerned about being first to market, though—just being better. “I think ultimately, we expect to be the winner based on data,” he said. “We’re frankly happy if Compass helps to pave a little bit of the way into this space.”
