Good morning Armchair Army,
Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.
Psychedelics were back in the spotlight.
Positive Phase 3 readout for LSD in depression - this time, from a NASDAQ-listed company, Definium Therapeutics:
(Source, Fierce Biotech)
The CEO called it “the best data he’s ever seen”...
Let’s be honest…
Every parent thinks that their child is the most beautiful child in the world.
Doesn’t always make it true.
But the headline results were very good.
An 8.1-point placebo-adjusted reduction on MADRS at six weeks.
(MADRS is the standard depression scorecard used in these clinical trials.)
For comparison, J&J's approved ketamine nasal spray for depression had a 6.8 reduction.
Compass Pathways' psilocybin had a 3.6 reduction.
(But comparing to Compass is a bit unfair, Compass are going after Treatment Resistant Depression, whereas these results were in Major Depressive Disorder, a different benchmark, but still worth knowing.)
The best results so far are still from Gilgamesh (the asset that was acquired by AbbVie last year for US$1.2 billion) - a 9.6 point reduction in MADRS, but in a smaller trial.
The Definium stock price rose by ~50% on the news and continued to climb throughout the week.
What was interesting was that shares in other psychedelics companies either were unfazed or rose on the back of this news.
Compass, AtaiBeckley, GH Research, Helus… all held strong.
Normally, when one company has a good readout, competitors in the space fall.
But psychadelcis have shown on multiple occasions that a rising tide lifts all boats.
There is a really good article in Biopharma Dive about this:
(Source, Biopharma Dive)
Days after the result, Definium went out to raise US$500 million.
Upsized to US$700 million.
Closed at US$805 million, after the underwriters took up their option in full.
(Source, Biocentury)
Two key takeaways from this…
FIRST, there is a LOT of money floating around the US for psychedelic medicines.
SECOND, psychedelics are working, and are looking like the first real competitor to SSRIs, Prozac and their cousins (in anti-depressants) for depression.
Johnson & Johnson has already proven that psychedelics for depression medication can turn into a profitable business.
Spravato is set to do US$2.3 billion in sales for its ketamine nasal spray for depression.
But taking a deeper look into the J&J Spravato story, the key unlock was the care delivery model.
Read my deep dive: Spray and Pray: How J&J grew a US$2.3b drug from a three-year bad trip
The care delivery model is where ASX-listed Emyria (ASX: EMD) plays - one of my foundational Armchair High Conviction Picks.
EMD is not a drug developer.
It’s a clinical services business.
(led by Greg Hutchinson, who was the CEO of SonicHealth Plus for 15 years)
Delivering psychedelic therapy to people around Australia is no easy task.
But it signed a deal with Medibank about 12 months ago, and since then, EMD has grown to five clinics and hundreds of trained therapists.
Right now, EMD is collecting very important data.
Real-world evidence.
NOT, to get a drug approved (it's already approved in Australia under strict conditions).
BUT to collect evidence of real-world outcomes that insurance companies will use to answer:
Will insurance companies pay?
How much will they pay?
(So far, Medibank has agreed to cover all of the cost for eligible members, $30,000 for PTSD and $20,000 for Treatment-Resistant Depression.)
Early data collected by EMD was presented at the International Mental Health Conference on the Gold Coast last week.
The headline result: a 6.8-point average drop on the QIDS-SR16, from 16.8 to 10.0.
(Source, EMD)
QIDS-SR16 is a different scoring method from the MADRS used in clinical trials.
The main difference is that the patient measures themselves (rather than a clinician) - meaning it is less appropriate for drug approvals and more appropriate for real-world evidence.
Last week, the CEO of Medibank (EMD’s partner) published a post on LinkedIn highlighting some of the issues that they are facing in the mental health space:
“Private mental health readmission rates remain alarmingly high, with over 45% of psychiatric patients readmitted within 12 months.
THAT is the number that insurance is trying to reduce…
So, with more data coming out of the US every month that shows psychedelic medicine works, it just strengthens EMD’s position.
A few months ago, EMD launched its Empax Global Partnership Program…
Opening its clinical network to international drug sponsors.
EMD has the largest network of trained therapists for psychedelic medicine anywhere in the world.
This puts it in a unique position globally to support the myriad of US companies now looking to develop psychedelic medicines through clinical trials support.
More money into the space = more opportunities for Emyria.
Disclosure: I own 2,000,000 shares of EMD. EMD has engaged Armchair Analyst Media for investor awareness services.
Let's dive in…
The Pulse Check
Neuren (ASX: NEU) receives a positive opinion for EU marketing authorisation of DAYBU® (trofinetide), potentially earning US$35M upon first sales, plus royalties and sales milestone payments. (NEU)
🪑It was a nervous wait for Neuren shareholders as the initial attempt to register the product in Europe was knocked back.
So, the fact that on re-examination, there is a “positive opinion” from the CHMP is good news. Doesn’t guarantee registration, but on the right track now.
Big market on the line.
CSL (ASX: CSL) announces that the EMA's CHMP recommended revoking TAVNEOS' EU marketing authorisation, which would impact around $145 million in annual sales. (CSL)
🪑Ouch! That Vifor acquisition is looking so bad right now.
Inoviq Ltd (ASX: IIQ) requests a trading halt pending the announcement of results from its EXO-OC test retrospective clinical study. (IIQ)
🪑🍿
Alcidion Group Limited (ASX: ALC) reconfirms FY26 guidance with expected revenue over $50M and EBITDA of $5M. (ALC)
🪑 Some really good numbers from ALC.
Algorae Pharmaceuticals (ASX: 1AI) becomes a foundation participant and launch partner for the healthcare sector in the Sovereign AI Infrastructure initiative. (1AI)
🪑 Not sure what this means practically for 1AI, but good to get the recognition.
Cash Injection
🪑No surprises here.
Looks like they are seeking $100 million at $1.45 according to the AFR. Ords and Morgans on the ticket.
Good luck!
BCAL Diagnostics (ASX: BDX) has secured an additional $4.9M in funding under its (existing) $10M Convertible Note facility. (BDX)
HITIQ Limited (ASX: HIQ) secures $1.4 million private placement, issuing 200 million shares at $0.007 each. (HIQ)
See you all tomorrow,
The Armchair Analyst
