By Michael Davitian; Shreya Saraf; Vivek Mittal, PhD
Treatment of major depressive disorder (MDD) is an attractive market opportunity that is ripe for disruption. The growing MDD patient population has significant need for better therapeutic options, particularly the ~3MM Americans with treatment-resistant depression (TRD). The development pipeline offers hope, with multiple promising novel mechanisms, particularly glutamatergic and GABAergic mechanisms. Advancements in diagnostic technology, data science, and basic neuroscience will make it increasingly possible for drug makers to develop precision therapeutics for MDD with improved efficacy/safety profiles. Finally, regulators have recognized the promise of psychedelics-based therapeutics and provided some flexibility so these drugs can be developed and marketed. Of course, challenges remain: the competitive landscape is increasingly complex, there is a shortage of providers to diagnose and treat patients, providers have significant limitations in their ability to adopt and use complex therapies, and regulatory barriers affect the development and commercialization of novel treatments (particularly psychedelics). However, taken together, we believe the opportunities available to drug developers outweigh the challenges. Further, thoughtful strategic planning can help companies navigate the challenges and mitigate risks.
MDD is a condition with an enormous societal burden and significant unmet need for patients. 19MM Americans have diagnosed MDD. The COVID-19 pandemic has increased the number of people affected by depression: According to a recent CDC survey, the among surveyed adults grew fourfold between the second quarter of 2020 vs. the second quarter of 2019. At the same time, the pandemic has elevated awareness of, and reduced the stigma surrounding, mental health treatment. This has caused an ever-larger share of people with symptoms to seek care. Unfortunately, existing treatments are often inadequate: About 15% of, or ~3MM, MDD patients have failed two lines of treatment with mainstay SSRIs (selective serotonin reuptake inhibitor) and/or SNRIs (serotonin–norepinephrine reuptake inhibitors) and have treatment-resistant depression (TRD). Thus, there is a great need for new therapeutics and a large market opportunity for drug makers who can provide another effective therapeutic option, particularly for TRD patients.
Fortunately, MDD has been an active area of R&D for drug developers with several different mechanisms showing promise in late-stage development, particularly psychedelic, glutamatergic, and GABAergic mechanisms. Some of these are listed in the figure below.
In addition to novel and promising mechanisms, drug development may be further accelerated by advancements in diagnostic technology, data science, and basic neuroscience. Historically, CNS diseases, including MDD, have lacked meaningful diagnostic and prognostic tools to guide treatment. However, this may be changing. Some recent examples for MDD include:
- Yamashita et al. (2020) developed a technique using machine learning to diagnose MDD using fMRI imaging and identified unique brain patterns in patients with MDD
- Le-Niculescu et al. (2021) developed a blood-based panel of RNA biomarkers to distinguish MDD severity and the risk of bipolar disorder
- Several companies are developing digital biomarkers to evaluate and assess MDD symptoms. For example, Mindstrong’s app measures how users tap, scroll, and type on their phone to measure stress and mental health symptoms. Ellipsis Health monitors the severity of stress, anxiety, and depression by analyzing short voice samples
Drug makers may be able to leverage these and other technologies to identify drug targets and better select patients for clinical trials. Neumora is a notable example of a company banking on the promise of precision medicine for CNS diseases, including MDD (note its KOR antagonist in the figure above). The company was recently launched with $500MM in funding and is hoping to take a multi-modal approach to precision medicine in CNS diseases, using artificial intelligence and machine learning to create “data biopsies” that integrate clinical biomarkers, genomics, imaging, etc. to help identify homogenous patient groups.
Finally, drug developers are finding increasing regulatory flexibility when it comes to studying and developing drugs that are formulations of controlled substances or illicit recreational drugs. In 2019, FDA and EMA approved Spravato (esketamine), a form of ketamine, for use in MDD patients. Multiple other ketamine products are in the MDD pipeline. COMPASS Pathways received breakthrough designation from FDA in 2018 for the use of psilocybin for TRD (currently Phase II). In 2017, the agency granted MAPS (Multidisciplinary Association for Psychedelic Studies) a breakthrough designation for the use of MDMA to treat PTSD. This regulatory flexibility is particularly important given the promise of psychedelic therapies in the treatment of MDD.
While MDD is undoubtedly a promising commercial and development opportunity for drug makers, there are numerous meaningful challenges that companies must navigate.
For starters, the competitive environment is complex and includes a growing number of treatments, including psychotherapy, generic and branded prescription medications, medical devices, and digital health applications. The extent to which any one treatment poses a threat to a novel therapeutic varies: some treatments are direct competitors, while others may be used in combination.
- Therapeutic competition includes multiple classes of generic and branded therapeutics. SSRIs and SNRIs – though frequently disparaged by companies developing novel MDD drugs due to their moderate and uneven efficacy – are effective treatments for many patients. They are also safe with limited risk of abuse, cheap (generic), and easy to prescribe. Many novel therapeutics in the pipeline are being tested for use in combination with these agents or in patients who are refractory to these treatments. Further, competition among branded therapies will become more significant as more mechanisms with different benefits and drawbacks are approved. Positioning a novel therapy in this environment will be challenging.
- Medical devices include electroconvulsive therapy, transcranial magnetic stimulation, and vagus nerve stimulation. Though these approaches are used infrequently and only among severely ill patients, there continues to be innovation. Researchers at UCSF recently reported promising results from an implanted neurostimulation device. The approach involves first identifying a personalized symptom-specific biomarker and treatment location using electrophysiology and focal electrical stimulation, and then implanting a chronic deep brain sensing and stimulation device.
- Digital health applications include various prescription and non-prescription applications patients can access on their mobile devices. Calm is a non-prescription app that provides guided meditation. Happify’s Ensemble is a prescription product that leverages cognitive behavioral therapy techniques to reduce or eliminate negative thinking patterns. The competitive effect of these apps is likely to be complex. In many circumstances, these apps will be a meaningful complement to drug therapy, improving outcomes and supporting greater compliance. On the other hand, these apps represent another treatment option for providers and patient to discuss and so they compete for mindshare/share of voice.
An additional challenge is the shortage of mental healthcare providers available to diagnose MDD and prescribe medication. This shortage has been exacerbated by the pandemic, which has caused more people to seek mental health treatment (see above). According to USAFacts, a non-profit civic organization, about 37% of Americans live in an area where mental health professionals are in short supply. They estimated that over 6,000 additional providers are needed to fill these gaps. Telehealth – which also grew dramatically during the pandemic – can help to alleviate some of these challenges by minimizing geographic barriers to accessing healthcare providers. However, it cannot completely make up for the shortfall in providers.
Furthermore, psychiatrists, who will be key prescribers for most of the medications in the pipeline, have lean practices with little or no office staff to support them. They lack the infrastructure to prescribe and administer complex therapies which involve monitoring and/or administrative burden. In recent conversations, some psychiatrists have shared with us that they are reluctant to use Spravato because of the drug’s monitoring requirements and REMS (Risk Evaluation and Mitigation Strategy) program. Similarly, many psychiatrists are apprehensive about adopting diagnostic and digital solutions. They have little experience integrating diagnostics into their practice and treatment algorithm; specifically, they are less familiar with the processes of referring patients for testing, interpreting the data, and using it to guide treatment decisions. With respect to digital solutions (e.g., patient support programs, monitoring solutions, digital therapeutics), they are similarly inexperienced with these technologies and wary of tools that may require them to train and educate patients (a service for which they are unlikely to be paid). More so than most other physician specialties, psychiatrists have limited capacity to take on various burdens associated with complex new therapies.
Finally, regulatory barriers remain significant for many drugs in development.
While regulators have enabled the development of psychedelic treatments, the barriers are still significant. These drugs are categorized as Schedule 1 controlled substances in the US, a classification reserved for drugs that are thought to have “no currently accepted medical use and a high potential for abuse.” This means federal funding for research has been nearly non-existent. These drugs have been studied under tightly controlled circumstances: typically, patients are given treatment and their experience is monitored and guided by a trained psychotherapist. Once approved, the therapies will have to be administered under similar conditions, meaning drug makers developing psychedelics will need robust plans to train and potentially certify providers.
Other non-psychedelic mechanisms have also faced regulatory constraints that have limited adoption. As mentioned before, Spravato has a REMS program which has constrained use. Zulresso (brexanolone), Sage Therapeutics’ first generation GABAA modulator, may only be prescribed at certified centers that monitor patients for excessive sedation and loss of consciousness.
MDD represents an enormous opportunity for drug makers, but it is not one without its challenges. To capitalize on this opportunity, drug makers should carefully consider the barriers and risks they will confront and plan for these accordingly.
- Target TRD patients or intermittent use for acute depressive episodes. Chronic frontline treatment is an inaccessible market segment in the absence of robust transformational data.
- Most pipeline therapeutics target patients refractory to two or more frontline SSRI or SNRI therapies. However, Sage is approaching the market with a rapid-acting GABAA modulator in zuranolone. The company hopes the drug’s rapid onset will enable it to disrupt the current treatment strategy – which relies on slow-acting chronic therapies – by offering a therapy that can be given episodically. This strategy is attractive because it avoids taking on entrenched and cheap SSRIs/SNRIs directly and instead addresses an unmet need for a rapid-acting therapy that can be given intermittently.
- Evaluate personalized medicine strategies carefully by weighing the tradeoffs and modeling different scenarios before determining a path forward. Personalized medicines can improve the probability of development success, increase differentiation by enhancing the efficacy/safety profile, and improve market access. On the other hand, added diagnostic criteria creates logistical barriers to prescribing which is particularly problematic for psychiatrists and limits the patient population.
- Targeting patient subtypes based on phenotypes/symptomology (e.g., age, comorbidities) may be more technically and commercially viable in the near term because psychiatrists are already familiar with identifying and classifying patients based on symptoms. Novel in vivo or in vitro biomarkers and associated diagnostics will require a larger shift in how psychiatrists treat patients and so this may be more feasible for early-stage therapeutics with a longer timeline to market.
- Engage with regulators early and often. In this dynamic environment, developers will need to ensure FDA and EMA are aligned with and supportive of development plans.
- As highlighted above, regulators remain cautious, particularly about the use of drugs and related compounds that have historically been for recreational purposes. To avoid onerous REMS programs, developers need to make sure regulators are fully satisfied with the safety of their compounds. Clinical programs should include robust assessments of safety and abuse potential.
- Similarly, developers pursuing novel patient segments or unusual treatment approaches (e.g., episodic treatment) should work with regulators to ensure there is alignment on the target patient population, how their eligibility for treatment should be determined, and the appropriate development path needed to validate the atypical treatment approach.
- Offer robust support to prescribers. More so than other physician specialties, psychiatrists need help to overcome barriers in prescribing, administration, and market access. Most practices have limited bandwidth for REMS programs or cumbersome payer processes. Patient support programs, physician training and education, medical affairs, and market access support must be well-executed.
- Training is particularly important for therapies with hallucinogenic and dissociative properties (e.g., psychedelics), where the psychotherapist typically guides the patient through their Companies have different approaches to this. COMPASS has a with four components for therapists participating in its trial. The components are: (1) an online learning platform, (2) in-person training, (3) clinical training, and (4) ongoing individual mentoring and webinars.  It will presumably offer similar training post-approval. Field Trip operates clinics throughout North America in which it administers ketamine and perhaps other therapies with hallucinogenic and dissociative properties in the future.
- Invest in understanding the competitive environment. As we have seen, competition in MDD is robust, diverse, and rapidly evolving. Drug makers need to be thoughtful about positioning their therapy in the market. This means understanding who the target patient segment is, developing a holistic view of the competition (including drugs, devices, and digital therapeutics) for that patient segment, and creating a development plan and marketing strategy to enhance differentiation for the specific competitive context.
- Support the patient journey. MDD patients may struggle to find providers due to the above-mentioned shortages. They may also be reluctant to seek treatment due to the stigma that surrounds mental and behavioral health. Drug makers – especially through partnerships – may be able to support patients who are seeking care.
- Patients may need resources and information about (1) the provider landscape so they can understand different treatment approaches and options, and (2) qualified providers with openings in their area or who are available through telehealth.
- PCPs are commonly the first point of contact for patients who need mental health services, and they may benefit from education, training, and information about referral options.
 Czeisler 2020 MMWR (https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm#T2_down)
 Yamashita 2020 PLOS Biology (https://journals.plos.org/plosbiology/article?id=10.1371/journal.pbio.3000966)
 Le-Niculescu 2021 Mole Psychiatry (https://www.nature.com/articles/s41380-021-01061-w)
 Scangos 2021 Nature Medicine (https://www.nature.com/articles/s41591-021-01480-w)
 USAFacts.org “Over one-third of Americans live in areas lacking mental health professionals” (https://usafacts.org/articles/over-one-third-of-americans-live-in-areas-lacking-mental-health-professionals/)
 USA Drug Enforcement Agency. (https://www.dea.gov/drug-information/drug-scheduling#:~:text=Schedule%20I%20drugs%2C%20substances%2C%20or,)%2C%20methaqualone%2C%20and%20peyote.)
 Tullis 2021 Nature (https://www.nature.com/articles/d41586-021-00187-9)
 Tai 2021 Front Psychiatry (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7908919/)
Michael Davitian is a Vice President in our biopharma practice, where he focuses on building the firm’s expertise within neurology and ophthalmology.
Vivek Mittal, PhD is a Partner and Managing Director in our biopharma practice. Vivek is focused on building Health Advances’ expertise in translational medicine through his work across therapeutics, diagnostics, and life science tools.
Shreya Saraf is an Engagement Manager and key member of our biopharma neurology and ophthalmology team. Shreya focuses on biopharma as well as digital health clients and issues.