Good morning, Armchair Army,
Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.
Disclosure: Armchair Analyst Media Pty Ltd owns 1,000,000 escrowed EMD shares. I have also personally bought an additional 1,000,000 EMD shares over the previous 12 months. EMD has engaged Armchair Analyst Media for investor awareness services.
This information is general in nature and does not constitute personal financial advice.
I’m going to make a prediction today.
In 10 years' time we will look back on 2026 as the turning point for the psychedelics industry.
Overnight, Eli Lilly, the world's largest pharmaceutical company, just entered the space…
Acquiring AtaiBeckly for US$2.8 billion… with US$1 billion in additional milestones:
(Source: CNBC)
It all can be traced back to April, when Donald Trump signed an executive order, essentially “greenlighting” psychedelics in the US.
(Source: The White House)
On the very next day, I announced ASX-listed psychedelics company Emyria (ASX: EMD), my second Armchair Analyst Pick.
Here is what has happened since…
IN APRIL, Trump signs an executive order to promote psychedelics use in the US.
THEN, priority review vouchers are issued to three psychedelics companies.
THEN, the TGA reduce requirements for authorised prescribers in Australia.
THEN, US-listed Definium publishes “best ever” Phase 3 data showing LSD’s use in depression.
THEN, Definium raises US$800 million in an upside stock offering.
THEN, US-listed Compass Pathways publishes its own Phase 3 data showing the durable effect at six months.
THEN, the FDA published a draft guidance on psychedelic clinical trials and delivery.
NOW, Eli Lilly has acquired a psychedelics company for up to US$3.8 billion.
… this is all within the last three months.
But there is so much to go…
NEXT? FDA public hearing on psychedelic medicine.
NEXT? Multiple readouts scheduled from US-listed companies in the next six months: Helius, AtaiBeckly and Definium.
NEXT? Compass Pathways to apply for the first approval of psychedelic medicines.
NEXT? First psychedelic approved.
… all still to come.
As I said.
2026 is set to be the year of the mushroom.
Last week, the FDA scheduled a public hearing for psychedelic medicines.
How will the industry deliver provider training, ensure patient safety, and manage data collection?
NOT drug efficacy.
(This is exactly the form on the US FDA website)
One company has the answers, though.
Emyria.
EMD provides mental health services through psychedelic-assisted therapies for people with PTSD and treatment-resistant depression.
It has been doing this for nearly two years now.
EMD has the largest workforce of trained therapists for psychedelic-assisted therapies and has the “playbook” for any US-listed company wanting to deliver psychedelic medication.
The industry is moving fast (faster than I even expected)... and Emyria has a big position to fill.
But first…
The Pulse Check
Neurizon Therapeutics (ASX: NUZ) completes Phase 2/3 trial enrolment for ALS treatment NUZ-001, with results expected in Q2 2027. (NUZ)
🪑 Big milestone. Well done.
4DMedical (ASX: 4DX) announces a US bipartisan bill proposing a $20M VA pilot program for using its 4D lung imaging technology to detect respiratory disorders in veterans. (4DX)
🪑 Nice deal.
LTR Pharma (ASX: LTP) executes a definitive agreement with U.S. telehealth platform Shed to commercialise its ROXUS® nasal spray for erectile dysfunction. (LTP)
🪑 Confirmation of an existing deal. This one sets out the minimum orders for the first 12 months: 150,000 units.
Dimerix (ASX: DXB) acquires a Phase 2 asset for acute kidney injury. (DXB)
🪑 I like this acquisition. An asset that is ready to go (with a Phase 2 protocol and an open IND) plugs the news flow gap over the next 18 months as the company completes the Phase 3 trial for FSGS.
Dimerix (ASX: DXB) has also secured a non-dilutive $10M loan from its major shareholder, Peter Meurs, and is in negotiations for an additional $40M in non-dilutive funding. (DXB)
🪑 DXB says that, with this $10 million, combined with its cash reserves and the upfront payment from the Everst licencing deal for Asia, it is “fully funded to complete the ACTION3 trial”.
BUT, looking at the loan terms, the loan is due for repayment in January 2028… with the final patient scheduled to finish the ACTION3 trial in March 2028.
… So they’ll still need to repay that $10M BEFORE the trial completes.
The company has said it is still in negotiations for another A$40M.
My take?
DXB really didn’t want to raise capital at this price.
So they’ve gone to the top shareholder to secure a bridging loan that gets them closer to the end of the trial, but it's just papering over the cracks as they negotiate a larger financing deal.
It’s bridging capital from a shareholder with sufficient equity interest to be as friendly as possible to the company.
Under the Microscope
Overnight, Eli Lilly, the world's largest pharmaceutical company, just entered psychedelics…
Acquiring AtaiBeckly for US$2.8 billion… with US$1 billion in additional milestones:
(Source: CNBC)
This is the THIRD deal for psychedelics within the last 12 months.
FIRST, AbbVie purchased Gilgamesh’s psychedelics program for US$1.2 billion in August last year:
(Source, Fierce Biotech)
SECOND, Otsuka purchased Trancend for US$1.2B for MDMA analogues:
(Source, Fierce Biotech)
NOW, Eli Lilly, the world’s largest pharma company, has entered the frame.
It is looking more and more likely that we will have an approved psychedelic drug in the US within the next year.
A huge moment for the industry ahead.
But then what?
Once the drug is approved, who will deliver it?
That’s where ASX-listed Emyria comes in.
EMD provides mental health services through psychedelic-assisted therapies for people with PTSD and treatment-resistant depression.
While the rest of the world is still in clinical trials for psychedelic medicines, EMD is building a commercial business in Australia.
How?
Because it can.
In February 2023, the Australian Therapeutic Goods Administration rescheduled MDMA and psilocybin from Schedule 9 (prohibited substances) to Schedule 8 (controlled medicines).
Meaning that organisations like EMD could start delivering psychedelic-assisted therapies commercially.
Emyria has treated hundreds of patients and has 5 clinics around Australia.
The challenge that lies ahead for psychedelics companies
If you look at the history of Sprovato, Johnson & Johnson’s ketamine nasal spray, the drug worked, but the clinical delivery system didn’t.
It took nearly seven years for J&J to solve the delivery challenge:
Delivering nasal spray ketamine is the easy version…
2 hours of clinical observation per dose
One clinical room per patient
One trained clinician monitoring (no formal therapy required during the session)
Twice-weekly dosing in the induction phase, tapering after
Patient walks in, sprays, sits, leaves
The next wave of psychedelic therapies is going to be a much harder logistical challenge.
6 to 8 hours per dosing session
Two trained therapists in the room (not one)
Specialised purpose-built therapy room (not a clinical chair)
Pre-dosing prep sessions and post-dosing integration sessions
Two to three dosing sessions over a 12-week course
Last week, the FDA scheduled a public hearing for psychedelic medicines.
… it played its hand with what it wanted to see from the industry.
Provider training. Patient safety. Data collection.
NOT drug efficacy.
(Source, US FDA)
The delivery and care model is the unanswered question for the industry.
… and you know who has the answer?
A tiny little ASX-listed company.
EMD has been delivering MDMA-assisted therapy commercially in Australia since late 2023.
EMD has the largest group of trained therapists for psychedelic-assisted therapy anywhere in the world.
It is building a mental health and clinical delivery franchise… all around psychedelic therapy.
Just as psychedelics are about to get approved in the US.
I’ve written before about the four vectors of success that EMD can secure from the US;
Clinical trial site services: Already happening with Psyence Group. High margin, strong patient demand (as it won’t need to be covered by insurance) - essentially a CRO for psychedelic trials.
Real-world data licensing: EMD’s 12-month longitudinal dataset directly addresses what the FDA identified as missing in the FDA previous applications - durability. Expect this to become more important as payer negotiations begin.
Protocol and care model licensing (the Playbook): When US clinics eventually need to deliver approved therapy, EMD’s Empax Model is the most extensively tested delivery system.
Pharmaceutical opportunity: The opportunity for EMD to develop its own pharmaceutical products in combination with the University of WA.
The most immediate opportunity is #3.
“Protocol and care model licensing”
Emyria has the playbook.
Something that will become very valuable to US-listed giants looking to commercialise their psychedelic therapy.
Provider training, patient safety, access and data collection.
All of the things that the FDA wants to see.
… and big pharma companies will need help with.
The blue sky US opportunity is presenting itself even faster than I could have imagined.
A big 12 months ahead for the company.
See you all next week,
The Armchair Analyst.
