Psychedelic drug contender stocks drop after FDA rejects MDMA treatment

By Steve Gelsi

FDA's move follows a negative independent advisory report on the proposed therapy

Shares of companies developing treatments based on psilocybin and other psychedelic drugs moved lower on Monday after the U.S. Food and Drug Administration rejected use of MDMA for post-traumatic stress disorder.

The, move announced on Friday, on an application from privately held Lykos Therapeutics is seen as a blow to companies working on various therapies using mind-altering substances to ease a variety of mental conditions, including PTSD and anxiety.

Lykos said it will seek a meeting with the FDA to discuss a reconsideration of the decision. The FDA has requested an additional Phase 3 trial to "further study the safety and efficacy" of its treatment, Lykos said.

The Multidisciplinary Association for Psychedelic Studies, which is the nonprofit parent of Lykos, said it still supports approval by the FDA.

"MAPS will continue working towards safe, legal access to this therapy for the more than 350 million people living with PTSD worldwide," the organization said.

MindMed Inc.'s stock (MNMD) fell 1.2% on Monday. On Friday, the stock fell 10% after the company offered about $65 million in stock to investors. MindMed is working on FDA approval for an anxiety therapy using LSD.

Compass Pathways Plc (CMPS), which is studying a treatment for severe depression using psilocybin, which is found in mushrooms, saw its stock fall 3.4% on Monday.

Shares of Atai Life Sciences N.V. (ATAI), which is developing therapies with psychedelic drugs, were down 2.8%.

Cybin Inc.'s stock (CYBN) was down by 5.4% on Monday. The company is developing a proprietary deuterated psilocybin analog for the treatment of major depressive disorder.

Stock-market investors received a strong hint about the FDA's decision in early June, when psychedelic-medicine stocks dropped sharply on the heels of a negative report on MDMA from an advisory panel.

MDMA, also known as the club drug Molly, has been shown to help relieve PTSD when administered by therapists.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-12-24 1502ET

Copyright (c) 2024 Dow Jones & Company, Inc.