A financial backer of the effort to legalize the drug MDMA for therapeutic use sees the potential for “exponential growth” should it win approval from the U.S. Food and Drug Administration, possibly over this summer.
MDMA, also known as molly or ecstasy, has already been granted “breakthrough therapy” status with the FDA.
Last month, MAPS Public Benefit Corp., the nonprofit entity that’s been promoting therapeutic use of the drug, submitted a new-drug application to the FDA for MDMA to be used with psychological intervention to treat post-traumatic stress disorder (PTSD). The next step would be a formal review of Phase III trial data with the FDA ahead of potential final approval in about eight months.
The drug would only be administered in a therapeutic setting, in order to help avoid its common recreational use as a club drug available on the illicit market.
Cody Shandraw, managing partner of Ambria Capital, has donated an undisclosed sum to MAPS Public Benefit Corp. to help fund its efforts to legalize MDMA.
Shandraw believes it’s possible the FDA could approve MDMA as soon as this August. The key to MDMA’s growth after that is whether therapy centers and trained therapists will be in place to roll it out, he told MarketWatch.
His hope is that the drug’s trajectory could follow a track similar to Johnson & Johnson’s JNJ, +0.44% Spravato ketamine treatment for depression. In 2019, there were less than 100 clinics in the U.S. administering the treatment; now, there’s around 2,500 doing so, according to Healingmaps.com data cited by Shandraw.
Also read: FDA approves Johnson & Johnson’s ketamine-like drug to treat severe depression
He believes it’s possible that up to 100,000 patients could be treated with MDMA in 2024, and as many as 750,000 in 2025.
“Realistically, it’ll come down to how fast the clinical infrastructure is able to accommodate or renovate those spaces,” Shandraw said. “It’ll grow exponentially after that.”
On the therapy-center front, Shandraw is also president of Healing Realty Trust, which plans to buy properties and obtain leases for therapy facilities offering MDMA treatment as well as ketamine- and psilocybin-assisted therapy.
With approval from the FDA , health-insurance providers will be able to offer coverage for MDMA therapy. The treatment would also qualify for coverage by the U.S. Department of Veterans Affairs for current and former military personnel. “That’s the best thing — that’s really what I’m most excited about,” Shandraw said.
Approximately 13 million Americans were diagnosed with PTSD as of 2020, according to Veterans Affairs. The rate is much higher among police officers, firefighters, soldiers and survivors of domestic violence, as well as African Americans, Latinos and Native Americans.
Behavioral mental health is one of the last unconsolidated sectors in the overall healthcare space. The industry at large has mostly moved outside of the traditional hospital infrastructure, with growth in urgent-care centers, dialysis centers and other outpatient services. MDMA therapy may follow a similar route, with freestanding clinics the preferred point of care instead of treatment in hospitals.
Looking ahead, Shandraw said MDMA’s approval by the FDA could prove to be “the tip of the spear” for other psychedelic drugs, such as the psilocybin-mushroom treatments being developed by U.K.-based biotech company Compass Pathways CMPS, -4.00%. Others, like New York-based MindMed MNMD, -0.97% MMDCF, , have been working on LSD therapies for anxiety.
Ambria Capital has backed a number of other companies developing alternative therapies, and it’s far from the only investor active in the space.
In late 2022, the Financial Times reported that $ 3.26 billion in capital had been raised by the 73 largest psychedelic-drug companies, including about $ 2.9 billion for drug development.
Yet less than $ 300 million of that $ 3.26 billion has been committed to clinical infrastructure, Shandraw said, noting the need for further investment in therapy facilities and practitioners.
The overall effort on MDMA legalization by MAPS Public Benefit Corp., including Phase III trials, has cost more than $ 100 million to date, according to Shandraw.
Also read: Why the founder of the shoe brand Toms is pledging $ 100 million to psychedelic research