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Business Of Biotech
Psychedelics For Mental Health Disorders With atai's Srinivas Rao, M.D., Ph.D.
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On this week's episode, Dr. Srinivas Rao, co-founder and CEO at atai Life Sciences, explains how his engineering background led him to the development of psychedelic compounds for treating depression, anxiety, and other mental health disorders. Internal drug development efforts at atai are focused on short-duration psychedelics that can work within existing healthcare infrastructure, with the potential to transform the treatment of mental health disorders. Rao also talks about atai's hub and spoke model for investing in other psychedelic companies, what MAPS/Lykos Therapeutics got wrong in the run-up to FDA's review of Lykos's MDMA candidate for PTSD, and whether psychedelic therapies need the "trip" to catalyze network disruption and neuroplasticity in the brain.
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Ben Comer:I'm Ben Comer, chief editor at Life Science Leader, and I'm speaking today with Dr Srinivas Rao, co-founder and CEO of atai, Life Sciences, a company developing psychedelic compounds for the treatment of mental health disorders such as depression, anxiety, schizophrenia and opioid use disorder. Dr Rao earned his medical degree, as well as his PhD in neurobiology at Yale, and he also holds a master's degree in electrical engineering, also from Yale. His career in the life sciences has included multiple scientific officer chief scientific officer, I should say and chief medical officer roles, as well as two previous CEO roles at Entheogenix Biosciences and Kyalin Biosciences. Prior to becoming CEO at atai, Dr. Rao was the company's Chief Scientific Officer for five years. On today's show, we're going to get to know Dr Rao and find out what's happening in the psychedelic therapy space, what's unique and challenging about this segment of drug development, how atai Life Sciences has changed since its inception in 2018, and what kind of impact FDA-approved psychedelic drugs could have on patients with mental health disorders. Dr Rao, thanks so much for being here today.
Srinivas Rao, M.D., Ph.D.:Thanks for having me, Ben, and thanks for the very generous introduction.
Ben Comer:Absolutely. I'm excited to speak with you. The famous American engineer, Henry Petrosky, said science is about knowing. Engineering is about doing. Absolutely, engineering is about doing. You are an engineer by training.
Srinivas Rao, M.D., Ph.D.:When did you know that you wanted to be an engineer. You know that's been something that has been part of my personality for a long time. I've always enjoyed tinkering, I've always enjoyed building things. I think that was a really important element to it. So once I got to school, I was really looking. I mean I pre-med was always something I that was kind of kicking around. I I enjoy, I always enjoyed aspects of medicine. But once I got to school, I mean I was really focused on either being a physics major or going into engineering. And after taking, you know, after freshman year, I think it became pretty obvious to me which way I was going to go. Again really enjoyed the building and the problem-solving element of engineering and indeed all my undergraduate projects, and in fact even the master's projects, were all biomedical in nature.
Ben Comer:Was there a specific class in those undergraduate years? That that, you know, really helped you make up your mind?
Srinivas Rao, M.D., Ph.D.:Yeah, I mean I it's. It's been a while. I certainly took some of the basic engineering class. I mean I'd always played with electronics.
Ben Comer:Yeah.
Srinivas Rao, M.D., Ph.D.:It's something I'd always been interested in. So I had a pretty intensive I had an intensive, literally intensive introductory physics class freshman year, enjoyed it a lot. Really small class was like seven of us, but it was more. You know, I met a lot of people that were really strong on the theoretical side and through the course of that class met a lot of people that were really strong on the theoretical side and through the course of that class met a lot of people that were really strong on the mathematical side of physics and so just realized that you know, it's probably a better fit for me to go into the engineering side of things.
Ben Comer:And you were at Texas Instruments, I think in the TI-81 and TI-85 years, is that right? And did you work on those products?
Srinivas Rao, M.D., Ph.D.:I worked on digital signal processing chips and these were just summer internships, I guess, and very much in keeping with what I was doing as an undergrad, which is really signal processing, which fundamentally is not that different from neuroscience, right? So this was electronic approaches to signal processing, the hardware associated with that. I actually did some very early work on AI technologies. I mean, it wasn't so much convolutional neural networks back then, but more linear-based neural network technologies. These are really the very basics and so implementation of that on signal processing hardware as well.
Ben Comer:That was at Texas Instruments.
Srinivas Rao, M.D., Ph.D.:No, that was actually as an undergrad.
Ben Comer:Oh, as an undergrad. Okay, and then what kind of made you decide to apply engineering to brain science, go from electrical signaling to, I guess, a different kind of electrical signaling?
Srinivas Rao, M.D., Ph.D.:Yeah, I mean, I think that was really it. So all of my undergrad work was around biomedical applications but it was pretty obvious there was a strong disconnect in the language that engineers use and physicians use or, you know, biological researchers use, and it just seemed a very obvious niche for me to understand those two languages and kind of be able to work within that space and bridge that space. And so that's where I went. And again I had this interest in neural networks and how neural networks in the brain process information and how that is distinct from how a computer and say, you know all the digital signal processing techniques I'd learned. So that's what. That's kind of what got me interested in the MD PhD side of things.
Ben Comer:Got it. Maybe we can talk about the formation of atai next. Who was involved? How did it come together?
Srinivas Rao, M.D., Ph.D.:So it actually preceded me by a little bit, right. So it was in 2018, and it was Christian Angermayer, Lars Wilde and Florian Brand. Those are the three initially that sort of started. This all came about because there was a desire to fund Compass Pathways. So this is in 2018. It was very difficult for Compass to find funding. As a developer of psychedelic therapies, Christian was able to put money in and actually get some of his friends to also put money in, like Peter Thiel and others. So there was this initial round of money that went into Compass and it was, you know it became evident to and then Lars actually went into Compass and so Florian stayed with what ultimately ended up becoming atai. And you know, essentially then it was there's lots of other things that could be. You know that this company you know that we could fund, right, there's other psychedelic compounds, there's other compounds, and so that's where a tie sort of started and tie all of Christian's shares and Compass were put into atai, and so then it was more like a family office for Christian for a period of time.
Srinivas Rao, M.D., Ph.D.:But over the course of 2019, there was a desire to potentially shift it in a slightly different direction, look broader than simply psychedelics. In fact, the second investment was a company called Perception Neuroscience and that was ostensibly a non-psychedelic, non-dissociative version of ketamine, so something that could be taken at home as an example version of ketamine, so something that could be taken at home as an example. So that's actually how I got involved with with atai. Um, because the co-founder of uh, perception was actually my very first boss in the industry, a guy named Jay Kranzler. Oh, interesting, yeah.
Srinivas Rao, M.D., Ph.D.:So that's how I got introduced and you know, the initial idea was for me to uh take the helm at Perception, but in having discussions with atai and the folks that I mentioned, you know, there was an opportunity for atai to go into a very different direction, which is really an operating company, and kind of pursue this hub-and-spoke model. And that's when I, you know, it made more sense for me to join at the atai level and really build up that capability. So, Lars, Christian, Florian did not have a biotech background, right? I mean, Christian certainly had a background in biotech investing, but of course that's different than operating a company. So that's what I came on board to do to really build up that capability, which I came on board in January 2019. And, of course, did exactly that and built up the team internally, started to work on some of the internally developed assets, including VLS-01 shortly thereafter, and also continued this model of finding cool assets that are outside and investing in them, and that's exactly what we did over the course of 2019, 20 and 21.
Ben Comer:I want to ask about the hub and spoke model of a tie, but before that, you mentioned investing early in Compass Pathways, one of the earliest, I think, psychedelic companies, perhaps aside from MAPS who's developing their MDMA candidate, Compass developing I think their lead candidate is a synthetic psilocybin candidate and you mentioned that investment was tough finding investors. Obviously there were some kind of hope, high profile investors. Peter Thiel, you mentioned what. What could you say about the investment landscape then versus now? We're going to talk a little bit about MAPS in a minute and what happened with them, but I guess in terms of how the investment area has changed since, since you've been involved in psychedelic drug development, yeah, it's been a bit of a roller coaster, right.
Srinivas Rao, M.D., Ph.D.:So 2018 was really characterized by complete pessimism on the space and just really thinking of it as kind of a crazy idea, right. So why would you do psychedelic? You know what's the benefit and is this even a thing with the agency? I think what helped catalyze things to some degree was actually approval in early 2019 of Spravato, which is a, you know, of course, were where there was a lot of investment. You know, interestingly, with COVID, of course, there was a lot of money that went into the stock market and there was a lot more speculative bets that were placed. You know, broadly speaking, neuroscience is considered a speculative bet and certainly psychedelics within it was. You know it was speculative squared in some sense, lots of money went into that space, tons, lots of smaller companies were created then.
Srinivas Rao, M.D., Ph.D.:And then, you know, after 21, there was a bit of a winter in biotech and in fact, the latter part of 21 is when things turned and that's been pretty much how it's been for some time. You know, certainly, as results came out, there was ability to invest. But it's been a bit more of a challenging time and I think Compass struggled with that too with their phase two results. I mean there was a lot of run-up on their stock going into that result or preceding that result, but once the results came, it was really, you know, stock price went down pretty significantly. So it's been a bit of a challenging time. That's not to say that good assets have not been able to get invested in, because they certainly have.
Srinivas Rao, M.D., Ph.D.:Early this year well, I think post-election and early this year, things were considered a bit more positive. There was a lot of, you know there was a bit of a Trump bump, et cetera, in terms of general monetary policy, you know, cutting taxes, et cetera, potentially leading to more investment. And then there was also the whole thing about RFK that has been said to have a more positive stance on psychedelics. I think that you know that was. I don't know where that's all netting out now. I mean there's been a lot of turmoil that you know, that is obvious at the federal level and how that's going to impact things. I know that, for example, you know we just announced that our VLS-01 trial, the Phase 2 trial we just had a, you know, just dosed our first patient. What has been apparent in talking to investigators is that you know there's been a lot of challenges with getting DEA licensing because of all the turmoil at the agency. I don't know at this point. I mean it's just we just need to let some of this settle out, I think.
Ben Comer:Right, and that's. That's DEA, drug Enforcement Agency which you need approval from in order to conduct clinical trials on on these kinds of substances. Just one. I have one more question, just about your, your background, dr Rao. I'm curious about if there were learnings that you were able to bring from past non psychedelic experiences at companies like Cypress Biosciences. Non-psychedelic experiences at companies like Cypress Biosciences we mentioned Kyalin, you worked at Retrophin, at Axial Biotherapeutics, at others. Were there specific learnings or insights that you picked up at those companies that help inform the therapeutic strategy at atai?
Srinivas Rao, M.D., Ph.D.:Yeah, I mean I think, well, there's a couple of things, there's many things actually. You know all of those, including DepoMed, by the way DepoMed too, right? I mean essentially neuroscience, certainly, and mental health, adjacent in many ways. So, particularly if you start counting things like chronic pain, which has a huge affective element. More importantly, the general strategy for clinical trials is pretty simple. I sent a similar. I should say you know they're all using patient reported outcomes. You can't ask a pay. You can't measure objectively someone's pain level. You've got to ask it. You can't ask. You know there's no biomarker for autism. Really, you have to ask the patient how their socialization is and their caregivers, et cetera. So the trials in many ways are similar across all of those indications. But I think the most important element for me has always been starting with the end in mind, right Starting with, you know, taking a physician's perspective, like what are we trying to accomplish? What is it that's going to? You know, what's the gap that we're trying to fill, the unmet need, but really keeping the patient and the physician perspective in mind and thinking about commercialization from the get-go. That is actually why VLS-01 is the way it is.
Srinivas Rao, M.D., Ph.D.:It was a decision early on to say you know, there are challenges with a very long psychedelic experience. It demands new infrastructure, at least adaptation of existing infrastructure. So let's try and take something that we believed would be fully fleshed out by the time we were ready, and that was, you know, the J&J infrastructure. If anybody can put together infrastructure, it is J&J right. They've got the muscle to do that. Anybody can put together an infrastructure it is J&J right, they've got the muscle to do that.
Srinivas Rao, M.D., Ph.D.:And Spravato launched into a tough time. They got approval in 2019, as I mentioned, but of course, got hit with COVID shortly thereafter, and this is an in-clinic kind of therapy. So they had a very rough few years, but they cracked the code, as you'd anticipate a company like J&J would. They were able to turn it around, understand what reimbursement looks like, put together the appropriate cookbook for the sites to be able to deliver this therapy and deliver it in a manner that's cost-effective for them. I mean, if the sites are not making money the clinical sites, the doctor's offices then it's not going to work.
Srinivas Rao, M.D., Ph.D.:But they were able to crack that code and you know they hit. They went over a billion dollars last year. 930 million of that was roughly 930 million of that was in the US and it was about 50,000 patients give or take. So if you think about that, for a second 50,000 patients out of roughly 3 million or so with treatment-resistant depression. So I think there's lots of avenues here. But again, it was always around keeping the end goal in mind and we made a bet on Spravato and Spravato infrastructure and I think that's been borne out.
Ben Comer:Yeah, so it sounds like that approval and launch of Spravato was pretty important, perhaps not just to a tie, but a number of companies that are focused on this space. Is that fair to say?
Srinivas Rao, M.D., Ph.D.:Yeah, I would say so.
Ben Comer:Yeah.
Srinivas Rao, M.D., Ph.D.:Yeah, go ahead. Yeah, I was just going to say that of course, the Lykos thing was the opposite in some ways, right, that really caused a lot of. That, did cause a marked pullback in space last year.
Ben Comer:Yeah, let's. Let's talk a little bit about that, since you bring it up. MAPS, the Multidisciplinary Association for Psychedelic Studies, spun off a commercial organization called Lykos, which was created to essentially receive approval and commercialize their MDMA candidate for post-traumatic stress disorder. Widely thought that it would be approved by FDA, including by me. It didn't. It didn't happen. There was an advisory committee where some I think, at least from MAPS perspective unexpected topics came up. The advisory committee voted against approval. The FDA followed that lead, didn't approve it, requested some additional trials, which has now led to some layoffs and reorganization at Lykos. What, what went wrong there? I mean there was. It was hard to find anyone who said, who didn't think that that product was going to be approved in August of what? 2013? 2014.
Srinivas Rao, M.D., Ph.D.:Yeah, I was one of those that wasn't quite so sure. So this is one of those weird ones where you know, generally speaking at this point, when something is going, you know when something has been submitted. I, you know, I have a pretty good sense of whether or not it's going to get approved. I was not convinced of this one, but I also was just saying I really don't get it. I really can't put odds on this one, because there were weird political pressures that pushed it in one way. But then there was a data package itself, even stuff that we knew about prior to the briefing book being released for the AdCom. That didn't make a lot of sense. I didn't make a lot of friends at a conference about I don't know. It was a year, year and a half ago when I said I don't know if it's going to get approved. I really don't have a sense of it. So why did I say that? I mean, there's a couple of things. First of all, the general premise didn't make sense to me that it was a drug that was assisting therapy, because therapy isn't the purview of the agency. That's kind of obvious, right. You can't say that as a label indication, because that's not what the agency does. Now, there are ways of sort of getting around this. Right, you can say listen, there are therapies that are standard of care for post-traumatic stress disorder, right, there's dialectical behavioral therapy, there's exposure therapy, there's a few others. So what we are going to do is get those patients that have PTSD. We're going to bring them in, we're going to start them on standard of care therapy one just to make it simple and then we're going to give them MDMA or we're going to give them placebo, not a problem, that's a known modality, right? The FDA has done this with opioid use disorder drugs. Right, you had their part of MAT, medically assisted therapy Totally cool. It's done with GLP-1s. Glp-1s are supposed to be used in the context of other health interventions, like eating as well as exercise, et cetera, to affect weight loss. Right? The agency doesn't regulate those things. It's fine. So there is a path.
Srinivas Rao, M.D., Ph.D.:But you know they went off the reservation a little bit. I mean, the therapy was non-standard, completely non-standard. It was completely non-standardized. And then they had this whole notion that the therapist had to be in the room. So there was therapist functional unblinding, which is totally new, right? That's just not a thing that's ever been dealt with before. So not only were they trying to get therapy approved, they wanted to get something that was non-standard approved. And then they were doing odd things like having the therapist in the room. So then the therapist knows whether the patient got a drug or a placebo and they will adapt. Right, they will adapt how they approach the patient. This is what the FDA was concerned about.
Srinivas Rao, M.D., Ph.D.:There was other stuff that came out once the briefing book was released and once the AdC om itself was released, but just the basic premise of the stuff that we knew about was problematic. That's what gave me pause. Oh, the final thing, of course. Course is just the size of the trials. 80 patients, ish times two is just very small for phase three, for a um, not orphan, indication, let's just put it that way. It's a.
Srinivas Rao, M.D., Ph.D.:You know PTSD is pretty common, right you would? You know you compare it to Compass, that's a thousand patients. Compare it to all the other companies out there. I mean no one is under 500 patients, I believe. I mean you can double check that. But you know that's a kind of a normal thing and the FDA, it just makes sense.
Srinivas Rao, M.D., Ph.D.:You need to understand adverse events. You can't go in with the premise saying this drug is obviously works and it's obviously safe. You have to go and demonstrate efficacy. You have to demonstrate the safety. You need to understand adverse events that are occurring in 1% of patients or more. Resolution would be good, but 1% demands that you do 300 patients. On drug, there's this rough rubric which is the three. You know the three X role. So you didn't get any of that here. So I think it was one of the FDA reviewers or what you know was basically like obviously very politically savvy, but basically said well, we didn't know how to put the label together. That's it. We don't the data. We don't understand. We don't understand the safety data that we're concerned, we don't understand it and we don't understand.
Ben Comer:Right and, as you said, FDA doesn't regulate therapy and I'm sure there was the issue of having to tease out, you know how much of therapy was contributing to the efficacy if they're paired together. Do you think MAPS went in that direction because they needed that aspect to deliver the outcomes, or it was just kind of a mistake?
Srinivas Rao, M.D., Ph.D.:outcomes or it was just kind of a mistake. They just had very fixed views on how things should happen and I think they frankly, over the years they just went against the establishment. That was kind of the thing right, and I think that's what caused some problems there. There are pathways that make sense and I think those pathways are suitable for MDMA, a hundred percent suitable, like the stuff I told you about. But they chose to go in a different direction.
Ben Comer:Right right MAPS, Lycos may have created some of their own challenges, but there are certainly challenges that are unique to psychedelic drug development, culturally, perhaps, scientifically. What can you say about those and maybe how a tie is thinking about overcoming those challenges?
Srinivas Rao, M.D., Ph.D.:Yeah, I mean, from the outset, my view is this is just another class of compounds, right, this is just another class of drugs. I was familiar with all of the ketamine work. I mean, ketamine was quite groundbreaking because it did affect benefits immediately, right, and there was some persistence up to a week to two weeks, so that was pretty cool. This is sort of the next step of that, the next iteration, right, and there was a lot of literature that supported that general motion, including small double-blind placebo controlled trials. But to me it was just another drug.
Srinivas Rao, M.D., Ph.D.:That, of course, isn't how these things are perceived externally, right, there's a lot of cultural overlay with these compounds, which I've always found interesting, you know, and there was a lot of discussions that these shouldn't be commercialized, blah, blah, blah. Okay, again, I never focused on that personally. It's just let's do the right studies, do it. The FDA has been very supportive of these compounds, I mean all the way through, with breakthrough designations and everything else. They like it, they recognize the need in the space there. There's a known pathway. Just let's follow that, let's go do it and let's generate the data that's needed.
Srinivas Rao, M.D., Ph.D.:Now, again, this is weird, because this is one of the reasons that I ended up going wanting to do discovery work very early on and finding new compounds because again there was this to me, a surprising level of cultural overlay with dmt and with 5-methoxy dmt and psilocybin. It's like, okay, fine, let's just go create some new compounds so we can sidestep all of that, um, all of that stuff. I think over time that's gotten better, though. I mean, there's, you know, there's there's certainly pockets and there's individuals that continue to believe that there's something above and beyond the chemical compound here, and that's fine, that continue to believe that there's something above and beyond the chemical compound here, and that's fine, you can believe whatever you want. But there's certainly a much more mainstream kind of view, mainstream being in the sense of physicians et cetera. But yeah, these are interesting compounds, they're powerful compounds. Pharmacology to some degree is understood. I mean, at least these would be the 5-HT2A receptors. So let's go do something with that game changer in some mental health disorders.
Ben Comer:But I'm sure that you also encounter physicians and patients that will hear you know psilocybin or ketamine or DMT or MDMA and think you know drug illicit substance. Do you encounter that physicians who are sort of less willing to refer a patient to a clinical trial? Or you know a treatment naive patient who is concerned about going into a clinical trial on a substance like that? That has something of a reputation.
Srinivas Rao, M.D., Ph.D.:Yeah. So I think that on the physician side it's a little harder to answer Right. It's because I have a selection bias. The people I speak to, probably, and the people are going into trials and everything else are more inclined to do that. We have done some market research and certainly around MDMA itself there was some negative views because, like, this is a party drug and you know why are we giving this to patients. But that speaks more to market building and physician education to me than it does about the compounds themselves. It's all about the data for me, and I think a lot of doctors ultimately kind of fall into that same bucket.
Srinivas Rao, M.D., Ph.D.:I mean sure there'll be individuals that are relatively more dogmatic about it. You know someone that went through the seventies and had a very negative you know negative thoughts about how it was handled and how you know the Leary and others kind of you know positioned it. I mean sure there'll be those individuals and patients also. I mean you know we are going for psychedelic, naive patients. We do not want patients that have a lot of experience because that has problems with the trial, which was something else that came up with Lykos, by the way. They had like 40% of patients that had taken MDMA before, so they had kind of a sense of whether or not they were getting placebo.
Srinivas Rao, M.D., Ph.D.:So we want naive individuals and there is absolutely anxiety in many individuals going into it because it is such an unusual experience and there's fears that things can come up, et cetera, and that's kind of what you're going for to some degree. I mean, you know, at least that's one of the hypotheses that the benefit is coming from being able to process things that haven't been processed. Again, that's a hypothesis and we don't have to flesh that out. But you know so there's absolutely anxiety. That's one of the other reasons. I kind of like shorter duration compounds the first one, the first experience. You know at least they get a sense of what that's like and they can maybe get another experience. You know, if it's a super long experience they can feel kind of you know that that can be even more daunting. It's like all right, well, it's only two hours. You know, right through two hours like oh geez, it's eight, six hours, eight hours, 10 hours, that's a long time. I mean just mentally kind of going into it.
Ben Comer:Not to mention the infrastructure required, physicians. You know, monitoring et cetera for that long of a period of time could get could get difficult. I want to talk about a atai's business model. You have your own development candidates as well as strategic investments in other companies. We mentioned Compass already, but Beckley SciTech Recognify Life Sciences. Am I saying that correctly Recognify? Can you kind of outline and you mentioned hub and spoke model, but can you explain the thinking behind this business model?
Srinivas Rao, M.D., Ph.D.:Yeah. So again, we had a more complex model for the most part when we started right. So we were pretty open to all sorts of things, including incubated assets like our DMT-1, blso-1, as well as our MDMA, empo-1. But we also did invest in other companies and that could be a majority investment or minority. We obviously had some public investments as well, including Compass. So we were open to many different things. We had a lot of assets that were in development, early development. You know, the reality is that we had high bars for everything for moving an asset forward, and there was a lot of organic sort of. You know, there's a lot of pruning for that reason and you know, as we now advance into later stage trials, the resources demands become a lot higher. So we've certainly winnowed things down. The primary focus for the most part is on our internal assets. We did make an investment in Beckley in January of last year, the reason being that we like the team, we like the company, we have a close relationship. We've had a relationship with them for an extended period of time. Philosophically, they're very much aligned with us with the short duration psychedelics. So they had BPL-03, which is 5-methoxy-DMT. It's distinct from DMT, which is what we're developing pharmacologically distinct but same to our paradigm. So we are very much in alignment on that. And these two assets are the furthest along in terms of short duration therapies, by far right. So these are both two-hour assets and kind of a single administration, very much just kind of drag and drop into Spravato paradigm. Single administration monitor the patient, see how they're doing and can send them home two hours plus after they get their dose. So very simple. So that's why we made that investment.
Srinivas Rao, M.D., Ph.D.:Now, Recognify was an older one. It's non-psychedelic actually. It's for cognitive and schizophrenia Very interesting compound with strong preclinical and clinical data, actually for pro-cognitive effects. And the mechanism by which it has these effects was very much something that actually came back to my PhD work, which was actually around working memory and in a schizophrenia lab. So it was cognitive impairments and schizophrenia. But there was a lot of interesting stuff with the pharmacology of that drug that suggests that it could be very beneficial for this patient population.
Srinivas Rao, M.D., Ph.D.:The unmet medical need is enormous with schizophrenia, the cognitive impairment element. So just really believe in the indication, believe in helping those patients out. Challenging indication, without a doubt. But yeah, there we are on about 60% With Beckley, we we got about a third with beckley. We have some, uh, we have, you know, warrants that can take us closer to 50. We have a lot of shareholder rights, um as well, and, you know, generally speaking, we've had the idea was to have some, you know, depending on results, depending on where both companies are at, potentially bringing the two companies together, um, at some point.
Ben Comer:Yeah, schizophrenia is a really interesting one and, of course, there have been some newly approved and exciting drugs in that space. I've been covering schizophrenia off and on for a number of years and I remember when Abilify tried to do the, you know, the digital pill to solve the adherence issue, which didn't exactly work. But, but these drugs are new mechanisms, right, the potential to really make a change in that disease. But you know, there were a number of years where there just wasn't much in development for these patients and, like you said, it's a. It's a a. It's an unmet need, to say the least. Atai, getting back to atai Life sciences you experienced some disappointing clinical results in 2023 with PCN 101, led to some layoffs, a refocusing of the pipeline. How has well? Let me ask this how has atai changed since its inception, since you started in 2018?
Srinivas Rao, M.D., Ph.D.:Yeah, so well, you know. Just to answer the first thing first negative results are part and parcel of this industry, right? Absolutely. If you knew the answers before going into the trial, then you don't need to do the trial, fundamentally, right, right, so that's part and parcel. I mean, as I mentioned, there's been a simplifying of the model, right? That's what we, certainly what I've been going for to keep the team more focused on a smaller number of assets, but really going all in. Smaller number of assets, but really going all in. And part of that is understandable because we did run many, many clinical trials across a number of assets, I mean from KUR101 to GABA's GRX917 to, of course, the multiple phase ones with PCN101 and the phase two as well. So we ran a lot of studies and we had high bars for going to the next step and many just didn't make it, and that is okay. That is how this, that that's how this process works.
Ben Comer:Yeah, and yeah, sorry, go ahead.
Srinivas Rao, M.D., Ph.D.:No. So just again, just kind of simplifying a lot, that the company is much more lean and mean at this point and really targeting the things that matter to us right now.
Ben Comer:Right, how do you and, as you say, you know this, everybody has a disappointing clinical result, something doesn't go exactly as as hoped or planned. How do you recover, you know? How do you kind of take that in and and move forward the next day after you get, you know, a data?
Srinivas Rao, M.D., Ph.D.:read like that yeah, I mean, I think this is one of those things where experience is really helpful. Right, you, you, there's always. I mean, I, I never say we understand that, I never say that there's. Yeah, this is a slam dunk. Right, that's just not the language I will use. I think that you always learn something. It's always massively disappointing that day and you know, the next day you kind of pick it up and take it from there Like what did we learn out of this? You know you do premortems, premortems. You also do postmortems, Like what could have gone better, what are some ideas? You know we spend a lot of time with a PCN 101 readout, analyzing the data and cutting the data in many, many different ways to try and understand what happened, what could have happened there, what could we have done differently. And you know that's again, that's just how it, that's just the nature of the beast.
Ben Comer:That's the way it goes. That's right. What are your key priorities and upcoming milestones that you're most focused on right now?
Srinivas Rao, M.D., Ph.D.:Yeah, we have a really exciting roughly 12 months or so 12 to 15 months, actually it's about 12 months. At this point we're in March, so we have four phase two readouts coming up. So BPL-003, the Beckley asset again the company where we own about a third of the company, a third it will be reading out with a Phase 2 in the middle of this year. In fact we had a press release recently indicating that the last patient had been dosed.
Srinivas Rao, M.D., Ph.D.:Recognify, the cognitive impairment and schizophrenia trial will also be reading out in the middle of this year. In fact that trial and the BPL-003 trial are kind of on top of each other at the moment in terms of which we'll read out first the VLS-01, the internal DMT asset, we'll be reading out in approximately a year, within approximately a year for the treatment-resistant depression study. And then we have another asset, emp-01, which is our MDMA, so single enantiomer of MDMA, which we're developing for social anxiety disorder. It's an earlier stage trial, so it's a phase 2A proof of concept trial. So that also is anticipated readout in approximately a year.
Ben Comer:Okay, and where does Compass stand right now? I think they had delayed a full readout on their phase 2 program. Correct me if I'm wrong about that, but what's next for them?
Srinivas Rao, M.D., Ph.D.:Yeah, I mean it wasn't quite that they delayed, it's just that they're waiting until the trial is completed. So their trials have six weekend points or two phase three. The two core phase three trials have six weekend points but then they have a blinded observation window that goes out to six months. So the challenge there is that if you want to read out from the primary it is an interim analysis, essentially right, so you can wait until all those patients are in. You can do an interim analysis. There are concerns sometimes about well many times about disclosing efficacy results from an interim analysis because there's a, you know, there's a, there's a recognition that that can impact the rest of the trial that's currently still on. Oh, I see that's a challenge that they kind of came up against and so what they have guided? So in the end I don't know that. I mean there were some delays, don't get me wrong, but I don't think they were quite as egregious as people may have thought. So their first Phase 3, the so-called 005 trial, their interim read on the primary analysis, is in the middle of this year. Apparently it's a somewhat limited data set for the reason I just outlined, because the trial is still ongoing. The full readout is, I believe, at the end of this year. I'm not sure if they guide it differently, but I'm pretty sure it's at the end of this year. So around the end, let's call it.
Srinivas Rao, M.D., Ph.D.:For the second trial, the 006 trial, they are, I believe, going to give the full data readout in the middle of next year. So I think that's their current guidance. And once those two are read out, there's obviously some open label work that's also continuing. You know the trials where you kind of roll into from the trial that you roll into from these trials. So yeah, that's kind of their timeline now. So you know getting all these wrapped up in kind of the middle of 26,. You know potential for, you know approval sometime in 27, essentially at this point.
Ben Comer:Announcing efficacy data on an interim basis. Does that have more of an impact if your endpoints are not tied to you know, an objective biomarker? If it's, you know, getting back to what you were saying about the difficulty in a number of CNS areas having a more subjective kind of patient reported outcome, or does that happen with efficacy data revealed? You know in other, you know much more specific biomarker type disease areas.
Srinivas Rao, M.D., Ph.D.:Yeah, I have to admit I have much less experience with things like cancer and other indications like that, where there's obviously, for better or worse, very objective endpoints right Tumor-free survival and just survival in general. So as a general statement, it's not considered great to reveal data efficacy data prior to the completion of a trial. But there may be exceptions for things like that and certainly with orphan indications, where even open label can be acceptable. I mean, even in some cancer indications there's, if you have a very good sense of the natural history of a compound, at some point it becomes unethical to give a drug in a placebo-controlled study, even though that's on top of standard of care. I mean, if you've got a pretty good sense that you're saving lives, at some point it's like, yeah, well, you can't give them placebo anymore. So there's a lot more latitude in that context.
Ben Comer:Right, there's a lot more latitude in that context, right, do you? And it's it's interesting you say, for better or worse, because I think about this too with biomarkers, because you hear about disease states where you know you show, for example, a tumor has shrunk a certain amount. The patient may not necessarily feel any better or may even even feel worse. So there, I think there are pros and cons with a strict objective biomarker versus a more subjective biomarker. But my question for you, dr Rao, is do you think that we're anywhere close to getting to a biomarker in some of these mental health disease, whether it's imaging or something else? And how helpful would that be if you were able to kind of hang your hat on a biomarker in, you know, depression, for example?
Srinivas Rao, M.D., Ph.D.:Oh man, it would be unbelievably helpful if we could do it. I think it's been one of those areas that's been very fraught. People have been trying to do this for a long time, whether it's EEG or imaging, et cetera.
Srinivas Rao, M.D., Ph.D.:I mean, I'm always interested in it. One of the things that's always intrigued me about psychedelics in particular is this notion that they can help with ruminative thoughts. Right, and that's been something that you know the data has been sort of. It's not the highest quality in some sense, but a lot of imaging studies have suggested that the default mode network and things like that you can see some persistent changes in that and that may correlate with the efficacy. Amazing, if that's true, and it's something that I'd love to explore further. It's not a regulatory endpoint too. Actually validate something like that, which would be considered a surrogate endpoint, would take a lot, but of course, it markedly simplifies things if something like that can actually work.
Ben Comer:Right. Several companies now David Olson at Delix is one example that comes to mind are working on psychedelics that have been engineered to remove the hallucinatory aspect, the trip, so to speak. What's your opinion?
Srinivas Rao, M.D., Ph.D.:Dr Rao on whether the trip or an altered state of consciousness is needed to deliver the therapeutic outcome. So my conceptualization of it is that these compounds are sort of doing two things right. The first is that they are causing a network disruption and that network disruption is manifest as a psychedelic effect, right. And the second thing they're doing is causing marked neuroplasticity. So how I view it is that you've got this frozen snow globe that's got patterns in it that are not good, right, that are essentially, you know, bad for the patient. The psychedelic is doing two things it's thawing it out and then it's shaking it up and then, obviously, as the drug wears off, it refreezes and it's got a new configuration. Then, and for reasons due to regio specificity again talking about some of these networks that seem to change their dynamics and their activity it's a more helpful configuration that they freeze back into. So, in that conceptualization, having something that's not psychedelic isn't necessarily helpful on its own, right. So that's a theory, of course, and we don't have data to support it or disprove it at the moment. So I know that, Delix, I think they pushed their timelines back. I mean, I know that they're working on a phase two, so that's going to be very telling.
Srinivas Rao, M.D., Ph.D.:I think there is avenue, there are some useful avenues for non-psychedelic compounds, and that is to put in conjunction with therapy. So if you, you can affect network disruption in many different ways, one of those is therapy. That's fundamentally what you're doing right. Cognitive behavioral therapy is a means of addressing negative thoughts. That's kind of what I was getting at right. So you could do it all at once with the psychedelic, but that's got psychedelic effect. Or you could do it a bit more slowly over time, but maybe more constructively over time you know who knows and allow it to cement in with these compounds right. So the way I like to think about that is you know, again, I mentioned I've done a lot of work in pain. So if you break your leg or something, you're likely going to get physical therapy right Once the cast comes off. Or once the cast comes off or once the brace comes off, you can get the most out of that therapy if you take a ton of NSAIDs prior to going into therapy, because it allows you to create a range of motion, it allows you to really exercise the joint. So that's how I think of these non-psychedelics and again, it's all a theory at the moment I don't have any data to support that, but you know it's.
Srinivas Rao, M.D., Ph.D.:We've been working on non-hallucinogenic or putatively non-hallucinogenic compounds as well, so we're intrigued by the space and it could be completely wrong. Maybe they do something completely on their own and that's totally cool and that'll be interesting. I'm a little suspicious that, and you know we have really done the team at atai has done a fantastic job of elucidating how this biased agonism is working. We've got a very good sense of that and how the psycho messenger systems are working to affect psychedelic effects or neuroplastic effects. So yeah, I mean I'm intrigued by this. Let's see how it all plays out. I mean there will be some dynamic. You know I have a hard time believing there are no perceptual effects, to be honest, but it might not rise to the full level of psychedelic effects. It may be something that's reasonably well tolerated, even in an outpatient setting, but all of this is TBD.
Ben Comer:atai's products, assuming they go forward and are eventually approved, will they be administered not in concert with therapy, in a sense that therapy is in the label, the way that it was with Lycos' MDMA product, but will there be a kind of, you know, a strong recommendation, or how does that work in terms of, or I guess how do you think about it for let's use depression or anxiety as an example? Will you know, will there be a therapy component to administering the drug?
Srinivas Rao, M.D., Ph.D.:No, we don't have any therapy component in our administration. So in fact, for VLS-01, it's pretty limited at the amount of therapist interactions. It's an hour prior to dosing, so there's a one hour. It's, I think that one is an actual visit prior to dosing. It's really to help prepare the patient right.
Srinivas Rao, M.D., Ph.D.:So essentially, to some degree, what is manifesting during the psychedelic experience is what you are kind of thinking about and what's you know. There's a suggestibility element to it. So if you are thinking about the things that are bothering you, like what is it you want to change, you know, etc. Some form of intention setting could be helpful. At least that's that's speculated at this point. Um, so we do some of that, but we also have a big part of it is just giving, is ensuring psychological safety. So what can we do to make sure that you know if you're really struggling? You know we can teach you box breathing, so that's a nice easy way of kind of settling yourself down. So we want to make sure that you've got some experience with that going before going into it. We have a one hour session afterwards. It's strictly psychological safety.
Srinivas Rao, M.D., Ph.D.:As I mentioned, things can come up where this is a well-known phenomenon, right? So some history of abuse, some history of trauma can come up or, you know, some memories of that can come up. We want to make sure that the patient is psychologically stable, and it's kind of like if you had chest pain during administration of these compounds ketamine or anything else. You want to make sure the patient, you flag that. You want to make sure the patient is medically stable, so you'd have a cardiology consult potentially. Here it's the same kind of thing. Something came up. You want to make sure the patient has support, as they kind of figure that out, so you'd want to refer them to a therapist in that context, but there's no specific therapy that's outlined for this.
Ben Comer:And then is there a therapist or a physician that will be monitoring, I guess, during the session, similar to, I think, the way it's done with Spravato. I want to say it's up to five hours, but maybe it's less than that two hours.
Srinivas Rao, M.D., Ph.D.:So, yeah, I mean absolutely, the patient needs to be monitored.
Srinivas Rao, M.D., Ph.D.:I mean, if you look at the, so the FDA provided some guidance, right, some draft guidance around psychedelic therapies, and they said that they need two people to monitor these patients, which I think has a lot to do with the fact that what they had been, what was front of mind for the agency at that time was MDMA through Lykos, as well as Compass, and both of these are the Comp360, and both of these are long duration.
Srinivas Rao, M.D., Ph.D.:So I think a lot of it came from that. With these short duration compounds, you know, what we have currently is someone in the room with the patient not therapeutic, but just monitoring for safety and, you know, just making sure nothing untoward is happening and then we have someone else that's monitoring through a camera, and that's what we have. Hopefully, over time, it can be more like Spravato, where there's only someone that's monitoring through the camera Basic telemetry, making sure the blood pressure and pulse are not, you know, doing anything crazy and then just making sure that the patient is, you know, is doing their thing but isn't bouncing off the walls, right? That's going to need some intervention.
Ben Comer:Are there any standardized settings type of like music playing or anything like that in the trials, or do you anticipate that being used in practice?
Srinivas Rao, M.D., Ph.D.:Yeah, that's a great question. I mean, people do use that, obviously, for all of these things. We have the mask on, because you tend to have more intense visuals, et cetera. If you have a mask on, you're not looking around. And then we do have music as well, but the role of that music is not clear yet. It's yet another variable variable at some point needs to get, uh, um, isolated and understood, but right now there's no data that, one way or another, you don't want something that you know you're probably not going to listen to death metal while on these compounds, but you know something that's generally calming, is probably uh, is probably not unreasonable right, and you anticipate having a um, a REMS program similar to Spravato.
Ben Comer:That will kind of guide all of those practices during the administration as well. Right, yeah, all right. Final question for you, dr Rao what impact do you think psychedelic therapy could ultimately have on mental health globally?
Srinivas Rao, M.D., Ph.D.:I mean, I think it has a potential to have a massive impact. Right, this is just. Again, it's a marked shift in paradigm. Esketamine was the first one. It's rapid resolution symptoms, but it's a lot of administrations, right, that's the challenge. With Spravato You're going in twice a week for four weeks. Once a week for the subsequent four weeks. It's many hours out of your week. You can't drive home, you're kind of down for the count for that day. This could potentially allow one or two administrations over the course of, say, four to eight weeks. That's just a big shift that can then get someone into remission, get many more people into remission.
Srinivas Rao, M.D., Ph.D.:Having it approved, having it standardized, allows for reimbursement so many more people can benefit from in the United States. That's true elsewhere as well. You're certainly welcome to take these compounds. You know, particularly magic mushrooms and other compounds, but our other materials, of course that's not controlled. You have no idea what you're getting and it's expensive, at least in the United States. You know, usually these are these sort of ceremonies and things are on the order of several thousand dollars. So there's a very limited number of people that can benefit from just kind of like ketamine. Right, ketamine typically is around $500 a pop if you're doing it and it's out of pocket, as opposed to Spravato where it's really your copay or deductible, which is typically substantially less. So it's a different paradigm. It could help a lot of people just from that perspective, and that's again what we're doing. And once there's approval in the US and Europe I mean there tends to be more it opens the floodgates to approvals in many other countries, many other territories.
Srinivas Rao, M.D., Ph.D.:And you're not on that medical need Right. This is one of the greatest causes of disability in the world. Right Fifty percent of people will have some kind of an affective disorder over the course of their life. It's big. So this could be a huge step in the right direction for all of those patients.
Ben Comer:Well, thank you very much for the conversation today. I really, really enjoyed speaking with you. It's an exciting area of development in the industry and we'll be watching atai to see what happens.
Srinivas Rao, M.D., Ph.D.:Thank you. Thank you for your time.
Ben Comer:That is Dr Srinii Rao, co-founder and CEO of atai Life Sciences. I'm Ben Comer and you've just listened to the Business of Biotech. Find us and subscribe anywhere you listen to podcasts and be sure to check out new weekly video casts of these conversations every Monday under the Business of Biotech tab at lifescienceleader. com. We'll see you next week and thank you for listening.
Ben Comer:Avantor is a leading life science tools company and global provider of mission critical products and services to the life sciences and advanced technology industries. Avantor works side by side with customers at every step of the scientific journey to enable breakthroughs in medicine, healthcare and technology. Avantor's portfolio is used in virtually every stage of the most important research, development and production activities at more than 300,000 customer locations in 180 countries. For more information, visit avantorsciences. com or find them on LinkedIn ex-formerly Twitter and Facebook.
