Rising High: Exclusive talk with biotech company PharmAla

PharmAla CEO talks MDXX class molecules, challenges, opportunities and more

In this edition of "Rising High," The Fly conducted an exclusive interview with Nick Kadysh, Chief Executive Officer of PharmAla Biotech Holdings, a biotechnology company focused on the research, development and manufacturing of MDXX class molecules, including MDMA.

MDMA MANUFACTURING: PharmAla was established with a dual focus of alleviating the global backlog of generic, clinical-grade MDMA to enable clinical trials and developing novel drugs in the same class. The company, which is the first publicly traded firm to manufacture clinical-grade MDMA, has completed proof-of-concept research into lead drug candidate ALA-002.

“I’ve been doing regulatory work in the healthcare and healthcare adjacent spaces for a very long time,” Kadysh said, citing previous positions at Red Bull, General Electric and Juul Labs. “The majority of my career I’ve spent working on the cutting-edge of what is permissible in society, and we really saw an opportunity in psychedelics.”

He said PharmAla saw opportunity in the amount of data from global clinical research showing psychedelics have a very real impactful ability to help patients. “We also had done a bunch of work with a number of scientists, who we still work with today, and we thought that we could really improve the MDMA molecule from a safety perspective,” the CEO said. “We’re an early-stage drug discovery company focused on MDXX molecules and we’re also a GMP MDMA manufacturer.”

He said the company’s entire research program has been focused on improving the safety profile of MDMA. However, Kadysh added that he thinks MDMA currently researched for treating Post Traumatic Stress Disorder is perfectly safe. “But if we want to open new indications and we want to create new modalities of care for different conditions, improving the safety profile of MDMA is actually quite important,” the CEO said. “MDMA has cardiotoxicity issues and some neurotoxicity issues that are notable, so we’ve been working very, very hard to create novel chemical entities that are safer on that perspective.” The company decided to begin manufacturing MDMA amid work with research partners, who were seeking regular MDMA for research purposes, he said. “The world is in a huge, huge shortfall of clinical-grade GMP MDMA and so we made a business decision to also manufacture just regular, generic MDMA and sell it to researchers, mostly universities,” Kadysh said.

REGULATORY-FIRST ORGANIZATION: As competition continues to ramp up in the psychedelic space, the CEO pointed to PharmAla’s first mover advantage and regulatory first perspective as key differentiators. “First-to-market is obviously a huge thing, that’s one,” he said. “Two, we pride ourselves on being a regulatory first organization. We believe that because this is a highly regulated space, really having a keen understanding of the regulatory environment is actually the biggest predictor of success.”

Kadysh said investors interested in psychedelics should look to invest in companies that understand their markets from a regulatory perspective. “I wrote in the Financial Post about two years ago that this industry is not cannabis and investors should not look at it as cannabis,” he said. “I think that still holds true today. This is a very, very different space and that is driven by regulatory factors.” The CEO added PharmAla has a very low-cost model, generating intellectual property and manufacturing product, but not in its own facilities. “We do contract manufacturing and that keeps your costs much lower,” he said. “We can absorb a lot more price compression than a lot of other players.”

MONASH UNIVERSITY AGREEMENT: In April, PharmAla announced it had been selected as the MDMA manufacturing partner for the Clinical Psychedelic Lab at Monash University for its upcoming Phase 2 clinical trial. “This is our fourth clinical trial that we have announced we are the supplier for in Australia alone,” Kadysh said.  “One of our major business lines is providing MDMA to researchers. Generally speaking, these deals are very low volume, but are very, very profitable because of the cost of GMP MDMA drug product as a non-commercial drug.”

He added he is very excited about the Monash deal as principal investigator Paul Liknaitzky is a globally recognized leader in psychedelics research. “He’s also the co-founder of a series of clinics in Australia,” the CEO said. “After July 1, we expect we’ll be treating actual patients there with MDMA and psilocybin, both of which we sell. It’s a great deal for setting the company up for the future both on the research side and commercial side.”

GMP MDMA CAPSULES: Additionally in April, Filament Health (FLHLF) and PharmAla announced the GMP release of MDMA capsules at the Metro Vancouver facility operated by Filament’s subsidiary Psilo Scientific. “When you make drugs, there are two big steps,” Kadysh said. “First you have to make the drug substance or the active pharmaceutical ingredient, basically like the powder, and then you have to formulate it into drug product.”

Completing these two steps is actually much more challenging than it seems, he said. “Like with everything else it is mostly a regulatory issue,” the CEO said. “With the GMP manufacturing of pharmaceuticals, you have to hold yourself to incredibly high standards. Especially if you’re working with controlled substances, especially when you’re working with potent molecules, because you definitely don’t want any safety issues.”

PharmAla produced the active pharmaceutical ingredient in August, finished making the capsules around February and announced the release in April, he said. “All of the capsules have passed all the release testing necessary and they can actually be sent on to customers,” Kadysh said. “I think this entire run has already been sold, so we’ll immediately start making more. It’s a lot easier the second time around.”

AWAKN PARTNERSHIP: In March, PharmAla announced it had been named the exclusive MDMA supplier to Awakn LS Europe Holdings (AWKNF). “Awakn is a great company,” the CEO said.  “They are very good at two things actually and I think both are incredible synergies with us. Awakn runs a series of clinics in the UK and are currently doing ketamine treatments but moving into other psychedelic molecules in the future.” When those clinics are approved to give patients MDMA, PharmAla anticipates that Awakn will be using the company’s product as it is their exclusive supplier, he said.

“They’re also researching and developing novel drug product forms,” Kadysh said. “They have a deal with Catalent, which is a major international drug product formulator, to put MDMA into a quick-dissolve capsule.” The capsule would represent a new dosage form for MDMA, he said, adding Awakn is using PharmAla’s MDMA active ingredient for that formulation. 

AUSTRALIAN DISTRIBUTION NETWORK: In a February shareholder letter, Kadysh said PharmAla would be working in 1H23 to develop a distribution network in Australia to serve the medicinal MDMA and psilocybin market.

“It’s going very, very well,” he said. “We went to Australia three weeks after the Therapeutic Goods Administration decision to allow for the prescription for MDMA and psilocybin. From a regulatory perspective, we understand the changes in Australia represent the cutting-edge for regulatory policy for psychedelics. It is going to allow for the treatment of patients directly in a relatively friction-free way.”

The CEO said PharmAla believes that the Australian market will be a viable commercial market for the first time in history for these drugs. “We’re working very, very hard to establish distribution and really press home our first mover advantage in Australia,” he said.

SCHEDULE 1 DRUG: The U.S. Drug Enforcement Administration currently places MDMA and psilocybin in Schedule I of the Controlled Substances Act, and Kadysh said he does believe it creates a barrier for widespread acceptance within a certain subset of the population. “What I always say to people is, ‘Please don’t forget that controlled substances legislation and regulations are human artifacts’,” he said. “It is not a controlled substance because of the nature of the thing, it’s a controlled substance because somebody somewhere put it on a list.”

MDMA should have never been labeled a controlled substance based on is toxicological profile, the CEO said, but the U.S war on drugs resulted in it being added to the list. “We as an industry still have a very, very long way to go to prove to people that these are viable medicines,” he said. “There are tons of medicines that we use every day that are way more dangerous and are also controlled substances in some cases, but we allow for their use because they’re medically relevant. The fact that something is listed as a controlled substance is not in any way, in my opinion, an indicator of its safety or its danger. It’s a human artifact.”

CHALLENGES: When asked about the largest hurdles facing the psychedelic space, Kadysh noted he is the board chair of trade association PsyCan, which has seen challenges in the mismatch between public perception of psychedelics and the reality of the industry. “Psychedelics are very much part of the zeitgeist right now and there’s a lot of excitement,” he said. “I think the excitement has actually overtaken the reality of where we are as an industry, both financially and from a scientific perspective, despite the amazing evidence.”

The CEO added people are starting to think of psychedelics as panaceas that will cure whatever ails them and that can be very dangerous for the industry. “We shouldn’t try to hold ourselves out as all things to all people,” he said. “These are medicines, which means that they are incredibly useful in specific cases for specific conditions if used properly.” Kadysh noted when he worked in vaping, the industry got ahead of itself and there was a popular backlash. He said although there is a very viable use for vaping products as a harm reduction tool, a whole bunch of kids started vaping and people rightly pushed back on the industry.

“If the psychedelics industry is not careful, we could have another popular backlash like that,” the CEO said.  “That’s what happened in the 70s. There was a counterculture but there was also a culture and the culture basically said, ‘We don’t like drugs.’ So we have to be thoughtful and careful, we have to lead with safety and data and we have to always put patients first.”

OPPORTUNITIES: As the psychedelic industry develops and matures, Kadysh said he sees tons of opportunity and it will take a whole-of-industry approach to actualize the promise of psychedelics.

“It will take manufacturers like us, drug discovery companies like us and many others, clinic operators, psychiatrists and psychotherapists,” he said. “A lot of people think getting drugs approved is it, but the reality is that is just the first step. After that you need to get insurance companies to reimburse you and then you need to get larger governmental and non-governmental organizations to approve the use of these drugs to treat these conditions.”

The CEO said he believes the first to create a whole-of-industry approach are going to be incredibly successful, billion-dollar companies. 

“Right now, most people are focused on manufacturing and drug approval,” he said. “One of the things that we have done really, really well at PharmAla is partnering with the right people to create that value chain all the way through and really thinking ahead to where the industry is heading. That’s what we’re most excited about and that’s where I think the majority of the promise lies, is putting together that value chain.”

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage Holdings (ACRHF), Aleafia Health (ALEAF), Atai Life Sciences (ATAI), Audacious (AUSAF), Aurora Cannabis (ACB), Avant Brands (AVTBF), Awakn Life Sciences (AWKNF), Ayr Wellness (AYRWF), Body and Mind (BMMJ), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clever Leaves (CLVR), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos (CRON), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), General Cannabis (CANN), BZAM (BZAMF),Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Goodness Growth (GDNSF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), India Globalization Capital (IGC),  Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), IM Cannabis (IMCC), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm Labs (MEDIF), MedMen (MMNFF), NewLake Capital (NLCP), Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN),  Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor (SHFS), Small Pharma (DMTTF), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Trulieve (TCNNF), Verano (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).

Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp, psychedelics, ketamine, psilocybin, LSD, MDMA