Breakthrough Therapy Shows Promising Long-Term Results for Depression

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Cybin Inc. (CYBN:NYSE American; CYBN:NEO) has announced positive results from its 12-month Phase 2 study of CYB003, a proprietary deuterated psilocin program designed for the adjunctive treatment of major depressive disorder (MDD). The study demonstrated significant and sustained efficacy. The results show that 100% of participants achieved a response, and 71% reached remission after receiving two 16-milligram doses of CYB003 three weeks apart.

Chief Medical Officer Dr. Amir Inamdar highlighted the findings in the news release, stating, "We are highly encouraged that our approach to treating MDD patients with two 16-milligram doses of CYB003, three weeks apart, has demonstrated consistent, robust, and sustained treatment benefits through to the 12-month follow-up. The trajectory of effect is truly remarkable. We previously reported response and remission rates of 75% at four months. By the 12-month mark, response rates improved to 100%, while 71% of participants were still in remission. These findings validate our dosing regimen and confirm that CYB003's effects are highly durable and offer sustained relief."

CYB003 has already received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA), which provides an expedited review pathway. Cybin's CEO, Doug Drysdale, underscored the implications of these results in the press release. He stated that CYB003 has the potential to revolutionize mental health care by moving away from chronic daily treatments toward more patient-friendly, infrequent dosing regimens. This could significantly reduce the burden on both patients and treatment centers compared to existing treatments like esketamine, electroconvulsive therapy, and transcranial magnetic stimulation, which often require numerous outpatient visits.

Alliance Global Partners reiterated its Buy rating for Cybin on November 14. The firm emphasized the potential of Cybin's lead candidate, CYB003, for Major Depressive Disorder (MDD).

The study enrolled participants who received either two active doses of CYB003 or a combination of active and placebo doses. Among those who received two doses of 16 milligrams, all participants were classified as responders.

This means they achieved a 50% or greater reduction in MADRS scores. Of these, 71% were in remission, defined by MADRS scores of 10 or lower. Additionally, CYB003 demonstrated a favorable safety profile with no new adverse events reported during the 12 months, maintaining its excellent tolerability and safety record.

Building on these promising results, Cybin is advancing CYB003 into Phase 3 trials as part of its Paradigm program, which will evaluate the therapy in a larger population of MDD patients. This next phase is expected to begin before the end of 2024.

The State of Psilocybin

Psilocybin, a psychoactive compound found in over 100 mushroom species, has emerged as a focal point in mental health research. On September 24, Inverse reported on a study examining psilocybin's effects on body dysmorphic disorder (BDD). The study revealed that a single 25-milligram dose significantly improved neural connectivity in participants, particularly between areas of the brain involved in emotional processing and executive function. This increased connectivity correlated with a measurable reduction in BDD symptoms. It also highlighted psilocybin's potential to address thought rigidity and rumination in mental health conditions. While the study was small and lacked a control group, researchers regarded it as an important step in exploring psilocybin's broader applications.

The National Institute of Health has detailed psilocybin's unique pharmacological properties and its interaction with serotonin receptors. These receptors, particularly 5-HT2A, are located in the brain's thalamus and cortex. This interaction alters sensory input and perception and may help address abnormalities in sensory processing often associated with mental health disorders such as depression and anxiety. Research supported by the institute has also indicated that psilocybin's ability to facilitate neuroplasticity, enhancing the brain's capacity to form new connections. 

On November 18, Psychology Today discussed the growing acceptance of psilocybin in clinical settings. The article emphasized its potential to provide relief for treatment-resistant mental health conditions, such as depression and PTSD, by fostering neuroplasticity and enabling patients to confront deep-seated emotional issues. Controlled studies have demonstrated psilocybin's ability to produce transformational results, with some patients experiencing lasting symptom relief. The article highlighted the importance of professional oversight in psilocybin therapy to ensure both safety and effectiveness, reflecting the substance's potential to redefine therapeutic practices in mental health care.

Psychedelics Under RFK Jr and a Trump Presidency

Following the announcement that President-elect Donald Trump intended to nominate Robert F. Kennedy Jr. for the Department of Health and Human Services, shares of companies in the psychedelic treatment space, including Cybin, saw significant increases. According to an article on Bloomberg published on November 18, 2024, Cybin's shares rose by 15%, outperforming many peers in the psychedelic sector.

Analysts weighed in on the broader implications of Kennedy's potential appointment. Brian Abrahams of RBC Capital Markets described the situation as one that "may have far-reaching and difficult-to-project implications for the biotechnology sector." Abrahams noted, "This adds a considerable layer of uncertainty and challenging investability until there is greater clarity on his likelihood of actually gaining the role, his directives, and who else will lead the other key federal healthcare agencies."

Bloom Burton & Co. maintained a Buy rating with a speculative risk on Cybin on November 1, raising their 12-month price target to US$114.00, up from US$3.00, following the recent share consolidation.

Rick Weissenstein of TD Cowen provided a more tempered outlook, suggesting that Kennedy was unlikely to be confirmed by a Republican-controlled Senate but added that Trump could use a recess appointment to install him. Weissenstein said, "If Trump manages to make a recess appointment, RFK Jr.'s term would only last for about two years at the most, though Kennedy Jr. could be appointed again through the same recess appointment or through the regular Senate confirmation process."

Chris Schott of JPMorgan acknowledged the uncertainty surrounding Kennedy's impact on the biopharma industry but highlighted investor caution. Schott stated, "It is difficult to evaluate the exact impact Kennedy would have on the biopharma industry at this point, but it is not surprising that the sector has come under pressure due to Kennedy's previously stated views."

Wells Fargo analyst Larry Biegelsen added that Kennedy's current policy ideas seemed to have little focus on medical technology, which "could result in the sector being relatively well positioned within healthcare." However, he warned that broader policies could have indirect consequences in the future. Biegelsen explained, "For example, Kennedy's concerns about vaccines may lead to a reduction in vaccination rates, which would negatively impact device companies that make the syringes for vaccines."

Markets also reacted strongly to the nomination of Robert F. Kennedy Jr. as the next head of the Department of Health and Human Services, as noted by Barchart on November 16. While vaccine stocks faced significant declines, the announcement fueled optimism in the psychedelic drug sector, with companies like Cybin experiencing substantial gains.

Barchart reported that Kennedy's nomination introduced market volatility. This was seen particularly within the healthcare space, with investors grappling with the potential regulatory shifts his controversial views might bring. However, this uncertainty provided a tailwind for psychedelic stocks, which surged amid Kennedy's supportive stance on psychedelic-assisted therapies.

According to Barchart, "Kennedy has openly supported research into psychedelics as treatments for mental health conditions, a sector gaining traction but still facing regulatory hurdles." His statements, such as his belief that "people ought to have the freedom and liberty to experiment with these hallucinogens to overcome debilitating disorders," were seen as a strong signal of potential regulatory leniency for the sector.

Cybin's Catalysts

According to the company's investor presentation, Cybin's CYB003 program is supported by significant progress and strategic milestones that align with its goal of transforming the treatment landscape for major depressive disorder. The recent 12-month Phase 2 data demonstrated durable efficacy, with a 71% remission rate and 100% response rate among participants receiving two 16-milligram doses. The therapy's rapid onset of action and long-lasting effects underscore its potential to address significant unmet needs in the MDD treatment space.

CYB003's FDA Breakthrough Therapy Designation further validates the program's clinical development strategy and streamlines its regulatory pathway. According to Cybin's September 2024 investor presentation, the company is preparing to initiate Phase 3 trials by the end of 2024. These trials will expand on the Phase 2 findings by evaluating CYB003's efficacy and safety in a larger population, with a focus on confirming its potential as a transformative adjunctive therapy for MDD.

The therapy also targets a significant market opportunity, with over 21 million people in the United States affected by MDD. By addressing the limitations of current antidepressant treatments, which often require daily dosing and may only offer symptomatic relief, CYB003 represents a shift toward intermittent treatments with long-lasting therapeutic benefits. Cybin is also leveraging its extensive intellectual property portfolio, which includes 70 granted patents and 220 pending applications, to solidify its position as a leader in next-generation neuropsychiatric therapeutics. These developments place Cybin at a pivotal point as it progresses toward potential regulatory approval and commercialization of CYB003.

Analysis of CYBN

Alliance Global Partners reiterated its Buy rating for Cybin on November 14. The firm emphasized the potential of Cybin's lead candidate, CYB003, for Major Depressive Disorder (MDD).

Analyst James Molloy highlighted the durability of the Phase 2 results, noting, "The data at this juncture looked good in Phase 2: an average improvement of 13.75 points on MADRS (12mg and 16mg cohorts pooled), which is statistically significant from placebo." Alliance projected a potential NDA submission by 2027, with a price target raised to US$25, valuing CYBN at US$16 per share and assigning a US$2 billion peak sales estimate by 2036.

Bloom Burton & Co. maintained a Buy rating with a speculative risk on Cybin on November 1, raising their 12-month price target to US$114.00, up from US$3.00, following the recent share consolidation. Analyst David Martin emphasized that Cybin has refined its Phase 3 PARADIGM program based on updated FDA guidance post-Lykos's challenges, reducing risks of functional unblinding. He stated, "Cybin’s trial design in which CYB003 is added as an adjunct to current meds offers a significant advantage over competitors requiring medication washouts."

The firm estimated a 55% probability of approval and US$2.1 billion in peak sales, basing their valuation on a 6x multiple of projected sales discounted at 12%.

Ownership and Share Structure

According to Refinitiv, 36.72% of Cybin is held by Institutions. Of them, Deep Track Capital holds the most with 7.65%, followed by Rosaline Advisors Inc at 5.38%, then Sphera Funds Management at 4.67%, Avidity Partners Management with 4.59%, and Logos Global Management at 3%.

Management and Insiders hold 6.75% with Peter David Rands holding the most at 2.18%. The rest is retail.

Cybin has 18.64 million free float shares and a market cap of US$210.42 million. Their 52-week range is US$6.50 and $21.66.